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Dr. Michael Williams MBAM 603 Fall 2007

Competition, Strategy & IT. Dr. Michael Williams MBAM 603 Fall 2007. 6:00- Introduction 6:10- Quiz 6:20- Presentation 7:05- Debriefing 7:20 - Break 7:35 - EPR/CRM 8:35- Strategy & IT 9:40- Self-reflection. 1:00 - Introductory comments 1:10 - Quiz 1:25 Presentation - ERP

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Dr. Michael Williams MBAM 603 Fall 2007

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  1. Competition, Strategy & IT Dr. Michael Williams MBAM 603 Fall 2007

  2. 6:00- Introduction 6:10- Quiz 6:20- Presentation 7:05- Debriefing 7:20 - Break 7:35 - EPR/CRM 8:35- Strategy & IT 9:40- Self-reflection 1:00 - Introductory comments 1:10 - Quiz 1:25 Presentation - ERP 2:15 - Break 2:30 - ERP Review 3:00 - Presentation - CRM 3:45 - Break 4:00 - Presentation Review 4:15 - Customer Relationship Managemet 4:40 - Self-Reflection Class Agenda

  3. Quiz

  4. BREAK!

  5. Finishing ERP…

  6. Why ERP? Who tracks sales? Who’s data is right? Mktng The Silo Organization Sales Acct. Mfgr. Dist HR ENTERPRISE SYSTEM NOTE: Most IS and data are now in ERP, but not all. = Data reqs. = Information Systems

  7. ERP Primer • What is ERP? • ENTERPRISE resource planning • Generic representations of typical business processes (e.g., financials, HR, manufacturing) • What are the benefits of ERP? • Shared data • Shared interfaces • Best practices

  8. ERP Vendor/Products • Who are the primary vendors of ERP systems? • SAP • Oracle / PeopleSoft / JDEdwards • Many niche players (e.g., SCT) • What is the ERP Product line? • Usually varies by industry • An example-OneStartat IU

  9. ERP Costs • Varies widely based on • Firm size, Existing IT infrastructure, Organizational complexity, Functional modules (e.g., financials, HR…), Amount of process redesign • According to a study by Meta Group (survey of 124 firms) • Average implementation time took 24 months • Hi=$300 Million, Low=$400,000, Average=$15 Million or $53,320/user • However, it returned a median annual savings of $1.6 million/year

  10. ERP Costs (Cont.) • Software expenses are often a SMALL piece of the expense • Implementation costs range from 5x to 10x the price of software itself! • Don’t overlook the costs of • Training • Integration/Testing • Consultants • Data Conversions • Increased HR values/costs • Extended ROI cycles

  11. ERP Costs (Cont.) • Training is a big, and necessary expense • 17% of the total cost should be training. • Companies that budget less than 13% of their costs for training are three times more likely to see their ERP projects run over time and over budget when compared with companies that spend 17% or more on training. http://techrepublic.com.com/5100-6315_11-1054263.html

  12. ERP Failures • Many ERP implementation fail • Well-known examples include Hershey’s Food, Whirlpool, FoxMeyer Drug • However, this is almost NEVER an IT problem but a management problem

  13. So, Managers Beware • Carefully review your processes to decide which, if any, to keep. • Select powerful champions across functions. • What cultural clashes will standardized data create? How will you overcome those? • What are the ethical (i.e., power) considerations of the project?

  14. Customer Relationship Management A review of how technology enables closer relationships with customers

  15. …a little history Technology tends to move in waves… Early 2001 - 1990’s - ERP Then…

  16. What’s the problem? • Who are your customers? • What do they want? • How can you drive demand for your products? • What new products would be most appealing to them? • What ad dollars $ drive new sales?

  17. The changing face of IT

  18. Angels & Demons • CRM is more of a mindset than a single system. • “Customer Relationship Management” • A strategy that uses IT to capture and manage information about customers’ needs and behaviors in order to develop stronger ties to them. • CRM helps firms to identify and manage both “angel” and “demon” customers.

  19. Comparing Customers

  20. Why manage customer relationships? • Education • Innovation • Cross- and Up-Selling • Loyalty through delight, value and relationship • Retention • Segmentation • Prioritization • Acquisition • Customization • Personalization • Anticipation

  21. CRM Market: What is CRM? Marketing Encyclopedia Contact Management Lead Generation Account Management Data Mining/ Warehousing Opportunity Management Company Direct Mail/Email Vendors Info Marketing Automation Sales Force Automation & Bills Lead Distrib’n & Mgmt Customers Marketing Campaign CRM PACE & Payments Pricing & Config Engines Products & Inventory Customer Service Accounts Personalization/ Recommendation & Ledger B Knowledge Base Field Service Live/Chat Interaction Web Self-Service Call Center Help Desk Knowledge Management Order Management Partner Management

  22. CRM-Sales Force Automation • What information and processes does management need from sales staff? • What information and processes do sales staff need to achieve superior results?

  23. CRM-Customer Service Communication Efforts Customer Information WITHOUT CRM WITH CRM Web Web The Firm Email Email One message to customers Catalog Catalog Phone Phone Store Store

  24. CRM - Marketing Automation The effective management and tracking of all marketing media to personalizeyour message to each customer and increase marketing ROI.

  25. CRM Components Optimized Customer Contacts Develop and implement business processes to ensure consistent, high-quality, and tailored interactions with customers that increases customer satisfaction and collects valuable data on their needs and preferences. Customer Knowledge Management Capture, analyze, and apply information about customer needs, behavior, and transaction history needs to maximize value delivered to the customer and value captured by the firm across the customer lifecycle. CRM Collaborative Organization The organization must evolve a consistent customer-centric philosophy across human resource management and internal communications. Integrated Technology A comprehensive integrated technology architecture must be put in place that cuts across existing organizational boundaries and is founded upon a customer-centric view of the business.

  26. CRM Technologies • No single “CRM” technology, but there are attempts at one-stop CRM solutions • Microsoft CRM • Oracle/Siebel Systems • SalesForce.com • Some “CRM” technologies include • Data warehouse • Data mining • Intelligent agents • Unified marketing management • Unified Multi-channel customer contact technologies (web, email, chat, voice) • Contact management • Web-based customer self-service

  27. CRM Costs • It depends on your “target” • Single applications can cost as little as $10,000-$50,000. But these usually don’t provide too much value. • CIO Magazine’s 2001 survey found that 50% of firms (n=1600) had a CRM budget of less than $500,000. • That same survey showed some firms spend > $10 M on CRM projects.

  28. Benefits of CRM • Discover, Acquire, and Retain Customers • Increase Customer Satisfaction and Profitability • Help Sales Staff Close Deals Faster • Cross Sell Products More Effectively • Make Call Centers More Efficient • Simplify Marketing and Sales Processes • Purchase Inventory with Better Accuracy • Allocate Labor Dollars More Strategically • Streamline the Supply Chain

  29. Where and How to Start? • Give every customer a unique ID • Capture transaction data • Capture human insights • Create and articulate a customer strategy • Create a customer-focused organization • Identify useful information & benefiting users • Provide simple, fast, convenient access to customer information and knowledge • Don’t irritate or stalk customers & employees • Start small, solve problems, add value, build on successes

  30. CRM Target and Lessons What was unique, interesting, insightful, or revelatory about the Goodhue et al. article?

  31. CRM Targets • Install individual customer-oriented applications (e.g., database marketing 56%, call centers 53%, web portals 40%…) • Build CRM infrastructure into organization (e.g., network and consistent data) • Transform the organization to customer centered (e.g., process redesign) Source: Goodhue et al., 2002 MISQE 1:2

  32. CRM Lessons • Each target has unique costs and benefits • Sponsorship varies by target • Each target evolves • Each target is messy • Scalability is key since each target evolves • Targets involve increasing role from users

  33. Get together with your teams and answer the following. What was the most compelling content provided in the presentation? What content area of the presentation needed more development? What can you learn from this to improve your next presentation? Post your answers in the Discussion Board in Bb For the presenting team, answer the following: What did I learn about myself from this team experience? What did I learn about working with others from this team experience? What will I do differently next time? Post your answers in the Digital Dropbox. Presentation Review

  34. BREAK!

  35. Team Exercise • In your teams, review the Tesco, UK case on p. 59 in the textbook. (10 minutes) • Discuss the three questions following the brief case. • Post your responses in Blackboard.

  36. Self Reflection …every experience in life enriches one’s background and should teach valuable lessons. Mary Gilson, Economist What’s Past is Prologue 1940

  37. IT & Strategy

  38. Strategy and IT How are / might Information and Process Systems help your firm address these strategic challenges and opportunities?

  39. Achieving a Competitive Advantage

  40. Strategy and the Internet What was unique, interesting, insightful, or revelatory about the Porter article?

  41. Strategy and the Internet • With your team identify and define at least 6 terms in the Porter paper that are new and relevant (i.e., switching costs, barrier to entry…)

  42. Discussion Questions In your teams discuss the following and submit your answers to Blackboard: • Who will capture the economic benefits that the Internet creates? • Will all the value end up going to customers, or will companies be able to reap a share of it? How? • What is the Internet’s impact on industry structure?

  43. Happy Birthday!

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