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  1. 8 Chapter Building Organizational Partnerships Using Enterprise Information Systems “If the Internet turns out not to be the future of computing, we’re toast.” Larry Ellison, Founder and CEO, Oracle Corporation Information Systems Today: Managing in the Digital World– Dr. Ali Zolait

  2. Learning Objectives Information Systems Today: Managing in the Digital World– Dr. Ali Zolait

  3. Learning Objectives

  4. Enterprise Systems • Problem: • Information systems growing over time • Lack of integration • Different computing platforms • Difficult to integrate • Data must be reentered from one system to another • Same pieces of data stored in several versions

  5. Legacy System Approach

  6. Enterprise System Approach

  7. Information Systems Supporting Business Activities • Internally focused systems • Support functional areas, business processes and decision-making within an organization • New information (value) is added at every step Information Systems Today: Managing in the Digital World

  8. Externally Focused Systems • Coordinate business activities with customers, suppliers, business partners and others who operate outside the organization • Interorganizational systems • Streamline the flow of information between companies

  9. Internally Focused Application: Value Chain • Flow of information through a set of business activities • Core activities – functional areas that process inputs and produce outputs • Support activities – enable core activities to take place Information Systems Today: Managing in the Digital World

  10. Core Activities • Inbound logistics activities • Receiving and stocking raw materials, parts and products • Cisco – delivery of electronic components from suppliers • Operations and manufacturing activities • Order processing and/or manufacturing of end products • Dell – component parts assembled to make products • Outbound logistics activities • Distribution of end products • Amazon.com – delivery of books to customers

  11. Core Activities (II) • Marketing and Sales activities • Presale marketing activities (e.g., creating marketing brochures) • Amtrak – use of IS to update prices and schedules • Customer service activities • Postsale activities • HP – downloads related to purchased products Information Systems Today: Managing in the Digital World

  12. Support Activities • Administrative activities • Support of day-to-day operations (for all functional areas) • Infrastructure activities • Implement hardware and software needed • Human resource activities • Employee management Information Systems Today: Managing in the Digital World

  13. Support Activities • Technology development activities • Design and development of applications to support the primary activities • Procurement activities • Purchasing of goods and services (inputs into the primary activities) Information Systems Today: Managing in the Digital World

  14. Externally Focused Applications – Value System • Flow of Information can be streamlined outside organizational boundaries • Coordination of multiple value chains • Value System Information Systems Today: Managing in the Digital World

  15. Externally Focused Applications – Value System • Information Flows in a Value System • Upstream information flow – information received from another company • Downstream information flow – information produced by a company and sent to another organization

  16. The Rise of Enterprise Systems Software programs have two forms: 1. Packaged applications • Written by third-party vendors • Used by many different organizations • Useful for standardized, repetitive tasks • Cost effective • E.g., Microsoft Money and Quicken Information Systems Today: Managing in the Digital World

  17. The Rise of Enterprise Systems 2. Custom applications • Developed exclusively for a specific organization • Designed for particular business needs • Higher development costs Information Systems Today: Managing in the Digital World

  18. Evolution of Enterprise Systems • Enterprise systems • Organizations start with stand-alone applications • Legacy systems

  19. Legacy Systems • Each department has its own system • Infrastructure specific • Inefficient processes • Potential for inaccuracies Information Systems Today: Managing in the Digital World

  20. The Need for Integrated Enterprise Systems • Advantages of integrated systems • Centralized point of access • Conversion needed • Enterprise Resource Planning (ERP) vendors offer different modules • Components that can be selectively implemented • E.g., modules of mySAP business suite

  21. Vanilla Versus Customized Software • Vanilla version • Modules the version comes with out of the box • Certain processes might not be supported • Customization • Additional software or changes to vanilla version • Always needs to be updated with new versions of vanilla

  22. Best Practices-Based Software • Most ERP vendors build best practices into their ERP systems • Identify business processes in need of change • Future updates are smoother if businesses change their business processes to fit with ERP systems • Is following the best practices always the best strategy? • If companies have competitive advantage from unique business processes

  23. Learning Objectives

  24. Business Process Management • Systematic and structured improvement approach • All or part of organization is involved • Rethinking and redesign of business processes • Became popular in 1990s • IS seen as key enabler for radical change • Process intended to be cross-functional

  25. BPM Steps • Develop a vision for the organization (specify business objectives) • Identify critical processes that are to be redesigned • Understand and measure existing processes as a baseline • Identify ways IS can be used for improvement • Design and implement a prototype of the new processes

  26. Conditions Leading to a Successful BPM • Support by senior management • Shared vision by all organizational members • Realistic expectations • Participants empowered to make changes • The right people participating • Sound management practices • Appropriate funding

  27. Enterprise Resource Planning • Data warehouse • Large, centralized data repository • Single place for data storage and access • Misnomers

  28. Choosing an ERP System Among the most factors in ERP selection • ERP Control • Centralized control vs. control within specific business units • Level of detail provided to management • Consistency of policies and procedures • ERP Business requirements • Selection of modules • Core and extended components

  29. Core and Extended ERP Components • Core components – support primary internal activities • Extended components – support primary external activities

  30. ERP Limitations • ERP falls short in communicating across organizational boundaries • Not well suited for managing value system activities • Other systems can work with ERP to provide these capabilities

  31. Learning Objectives

  32. Customer Relationship Management

  33. Customer Relationship Management • Web has changed the business • Customers have the power • Transactions vs. relationships • Keeping customers satisfied is key • CRM • Corporate-level strategy • Concentrates on the downstream information flow • To attract potential customers • Creation of customer loyalty • Managers need to be able to monitor and analyze factors driving customer satisfaction

  34. Key Benefits of CRM • Enables 24/7/365 operations • Individualized service • Improved information • Speeds up problem identification/resolution • Speeds up processes • Improved integration • Improved product development • Improved planning

  35. Developing a CRM Strategy • More than just software purchase and installation • Must include enterprise-wide changes

  36. Developing a CRM Strategy Policy and Business Process Changes • Policies and procedures need to reflect customer-focused culture

  37. Developing a CRM Strategy Customer Service Changes • Customer-focused measures of quality • Process changes to enhance customer experience

  38. Developing a CRM Strategy Employee Training Changes • Employees from all business areas must have a consistent focus that values customer service and satisfaction

  39. Developing a CRM Strategy Data Collection, Analysis and Sharing Changes • All aspects of customer experience must be tracked, analyzed and shared • Consider ethical concerns

  40. Architecture of a CRM

  41. Architecture of a CRM 1).Operational CRM( Front Office Systems) • Include systems for customer interaction and service • Personalized and efficient customer service • Access to complete information about customer

  42. Architecture of a CRM ( Front Office Systems) Sales Force Automation • Component of operational CRM • Primary goals • Identification of potential customers • Streamlining of selling processes • Improvement of managerial information

  43. Architecture of a CRM ( Front Office Systems) Sales Force Automation • Supports day-to-day sales activities • Order processing and tracking • Contact development, assignment and management • Customer history preferences • Sales forecasting and performance analysis • Sales administration

  44. Architecture of a CRM ( Front Office Systems) Advantages of Sales Force Management Systems for Sales Personnel Information Systems Today: Managing in the Digital World

  45. Architecture of a CRM ( Front Office Systems) Advantages of Sales Force Management Systems for Sales Managers

  46. Architecture of a CRM ( Front Office Systems) Sales performance Measures Tracked by SFA Example : • Revenue per sales person, per territory, or as a percentage of sales quota • Margins by product category, customer segment, or customer • Number of calls per day, time spent per contract, revenue per call, cost per call, ratio of orders to calls • Number of lost customers per period or cost of customer acquisition

  47. Architecture of a CRM ( Front Office Systems) SFA Provides Improved Understanding of Market Conditions • Improved understanding of markets, segments and customers • Improved understanding of competitors • Enhanced understanding of organization’s strengths and weaknesses • Better understanding of economic structure of the industry • Enhanced product development • Improved strategy development and coordination with the sales function

  48. Architecture of a CRM ( Front Office Systems) Customer Service and Support • Second component of operational CRM • Automation of traditional “help desk” services • Customer interaction center (CIC) • Multiple communication channels • Customer service anytime, anywhere through any communication channel • Low support cost

  49. Architecture of a CRM ( Front Office Systems) Enterprise Marketing Automation • Third component of an operational CRM • Comprehensive view of the competitive environment • Common factors tracked by EMA • Economic • Governmental and public policy • Technology and infrastructure • Ecology • Cultural • Suppliers

  50. 2). Analytical CRM (Back Office Systems) • Analysis of customer behavior and perceptions • Customized marketing campaigns • Up-selling • Retaining customers • Key technologies used to create predictive models • Data mining • Decision support systems • Continuous data collection and analysis is necessary