Achieving Operational Excellence and Customer Intimacy with Enterprise Applications

1. 8 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

2. Agenda • Enterprise applications • What are Enterprise systems or ERP? • What is SAP? • SAP Basics • SCM • CRM

3. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications STUDENT OBJECTIVES • Enterprise application • Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm. • Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers.

4. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications STUDENT OBJECTIVES • Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm. • Assess the challenges and new opportunities raised by enterprise applications.

5. Enterprise application Enterprise systems=ERP Supply chain management CRM

6. Why we need enterprise systems or ERP How does a business manage all the information needs from different functional areas Serving different managerial requirements? Let’s find out.

7. Early Automation Automation of tasks within departments Therefore, each dept had its own system(s) Functionality for tasks for that department only Systems weren’t powerful enough to attempt broader range of tasks Usually single vendor for all parts of system (e.g. IBM) All hardware and network components All operating system and application software Result: Generally communication between departments remained largely manual IS/IT was often at the mercy of single vendors Antony Upward,CGI

8. Problems that give rise to ERP Run a business based on information from tens of different databases and systems none of which speak to each other. Company I0 different product lines ,produced in separate factories, don’t exchange information. No business can afford disjointed information systems that don’t work together to produce a coherent picture of the entire organization.

9. What Are enterprise applications Business need enterprise systems to integrate information. Enterprise applications easily combine internal and external information to present a complete picture of the business.

10. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Systems • What Are Enterprise Systems? • Based on integrated software modules and a common central database • Integrate information from across company’s divisions, departments, key business processes in the four functional areas • Updated information made available to all business processes • Generate enterprise-wide data for management analyses

11. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Systems How Enterprise Systems Work Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise Figure 8-1

12. How enterprise system workexample Place order for tire rims Verifies customers credit limit Schedules the shipment, identifies the best shipping route and reserves the item from inventory. If inventory stocks insufficient to fill order, system orders from suppliers. Sales and production forecast are immediately updated General ledger and cash levels are automatically updated User could tap into the system to find the status of the order, at any min. Management could obtain info about how business operating Generate enterprise wide data for management analyses of product cost and profitability.

13. Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Business Processes and Information Systems • Close coordination of major functional groups in a firm. • Require great deal of information. • Information must rapidly flow within firm and business partners and delivery firm. Information system make this happen. Cross functional business process The Order Fulfillment Process Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions. Figure 2-1

14. Enterprise software Built around thousands of predefined business processes that reflect best practices .(Refer to next slide.) Companies map business processes to enterprise softwares predefined processes for desired functions System software can be rewritten in part, but may degrade performance and process integration For maximum benefit company must change its working to business processes in software.

15. Business processes supported by enterprise systems Financial and accounting: General ledger, accounts payable, cost-center accounting, financial reporting, etc. Human resources: Personnel administration, benefits accounting, time management, compensation, etc. Manufacturing and production: Procurement, inventory management, purchasing, shipping, quality control, etc. Sales and marketing: Order processing, quotations, product configuration, billing, credit checking, sales planning, etc.

16. Business Value of Enterprise Systems Increase operational efficiency Support decision making and rapid responses to requests Include analytical tools to evaluate overall performance Respond rapidly to customer request for information or products. Enforcing standard practices and data throughout company Providing firm-wide information to help managers make better decisions

17. Business Value of Enterprise Systems Allowing senior management to easily find out at any moment how a particular organizational unit is performing Determine which products are most or least profitable For e.g. Coca cola uses enterprise systems to standardize and coordinate important business processes in 200 countries. Colgate palmolive uses Sap R/3 ERP system.

18. ERP software Vendors Over 100 vendors globally 5 major vendors SAP:German, pioneer of ERP Oracle (acquired PeopleSoft) Microsoft Different versions are available for small businesses to large firms.

19. SAP • As the world's leading provider of business software • SAP (which stands for "Systems, Applications, and Products in Data Processing") • Delivers products and services that help accelerate business innovation for our customers. • Offers enterprise software and supply chain modules and CRM solutions. SAP = ERP

20. SAP in Pakistan National Foods, MCB Bank, Tetra pak, Nestle Pakistan, Coca Cola, Punjab Beverages, Barclays Bank, Shell, PSO, ICI,Service.

21. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Supply Chain Definition and and components • A network of organizations and processes • for procuring raw materials, • transforming them into products, • and distributing the products • Upstream supply chain: firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them • Downstream supply chain: organizations and processes responsible for delivering products to customers

22. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Nike’s Supply Chain Figure 8-2 This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers(tier1) and sneaker soles,uppers(tier2),supplier to these suppliers(tier3).

23. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems • Information and supply chain management • Supply chain inefficiencies • E.g. parts shortages, excessive inventory • Waste up to 25% of operating costs • Caused by inaccurate or untimely information • Uncertain product demand • Late shipments from suppliers • Defective parts and raw materials • To deal with these Safety stock: Kept as buffer for lack of flexibility in supply chain adds to costs

24. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems • Information and supply chain management • Bullwhip effect • Demand for product gets distorted as it is estimated by successive members in supply chain, causing excess stockpiling of inventory, warehousing, shipping costs • Just-in-time strategy • Perfect information about supply and demand so that components arrive at moment they are needed and finished goods are shipped as they leave assembly line

25. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems The Bullwhip Effect Figure 9-3 Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.

26. Supply chain management applications • Supply chain software is classified • Plan their supply chain(Supply chain planning) • Execute their supply chain(Supply chain execution) • Supply chain planning systems • Enable a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product. • Supply chain execution systems • Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.

27. Supply Chain Management Systems Automate the flow of information among members of the supply chain Follow a pull based model eg Walmart and DELL. Help make better decisions about when and how much to purchase ,produce or ship. Minimize inventory levels and expedite deliveries to customers

28. INTRANET AND EXTRANETS FOR SUPPLY CHAIN MANAGEMENT Companies are reengineering supply chain, aided by internet technologies and supply chain management software. Firms use intranets to improve coordination among their internal supply chain processes, and they can use extranets to coordinate supply chain processes shared with their business partners. Using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules.

29. i2 technologies and SAP supply chain management • i2 technolgies are supply chain management software vendor • SAP Supply Chain Management (SAP SCM) enables collaboration, planning, execution, and coordination of the entire supply network,

30. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Business Value of Supply Chain Management Systems • Streamline both internal and external supply chain process • Match supply to demand • Reduce inventory levels • Improve delivery service • Speed product time to market • Reduced supply chain costs lead to increased profitability • Increased sales

31. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems What Is Customer Relationship Management? • Capture, consolidate, analyze customer data and distribute results to various systems and customer touch points (contact points) across enterprise • Provide single enterprise view of customers • Provide analytical tools for determining value, loyalty, profitability of customers • Assist in acquiring new customers, providing better service and support to customers, customize offerings to customer preferences, provide ongoing value to retain profitable customers

32. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems Customer Relationship Management (CRM) CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing.

33. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems CRM Software • CRM packages are available with a wide spectrum of functions • Typically include tools for sales, customer service, and marketing

34. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems • Sales force automation (SFA) modules • Help sales staff increase productivity by • focusing efforts on most profitable customers • Provide sales prospect and contact information, product information, product configuration capabilities, and sales quote generation capabilities • Customer service modules • Provide info to Improves efficiency of call centers, help desks etc. • Assigning and managing customer service requests • E.g. managing advice phone lines, Web site support • Handle more calls give better service. • CRM systems include webbased self service capabilities.

35. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems • Marketing modules • Aid in marketing campaigns by capturing prospect and customer data, • Providing product and service information • Qualifying leads for targeted marketing • Scheduling and tracking direct-marketing mailings or e-mail • Analyzing marketing and customer data: • Identifying profitable and unprofitable customers • Designing products and services to satisfy specific customer needs and interests • Identifying opportunities for cross-selling

36. CRM Application Vendors • Enterprise software vendors like SAP • Oracle people soft • Sales force.com

37. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems Business Value of Customer Relationship Management • Business benefits: • Increased customer satisfaction • Reduced direct-marketing costs • More effective marketing • Lower costs for customer acquisition/retention • Increased sales revenue • By identifying profitable customers and segments for focused marketing and cross-selling • Reduced churn rate (number of customers who stop using or purchasing products or services)

38. Challenges posed by enterprise application Enterprise systems are expensive and difficult to implement. Require extensive organizational change Large new software investment If implemented atop flawed processes they cant provide value. Employees require proper training

39. EXAMPLES OF enterprise application SAP business suite BASED ON SERVICE ORIENTED ARCHITECTURE) Oracle e business suite Microsoft dynamics suite