chapter 8 enterprise business systems
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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. - PowerPoint PPT PresentationTRANSCRIPT
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
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Identify and give examples to illustrate the following aspects of customer relationship, enterprise research, and supply chain management systemsBusiness processes supportedCustomer and business value providedPotential challenges and trends
Learning Objectives
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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
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Case 1 Business Benefits of CRM Forex Capital Markets trades $20 billion
worth of currency per month12,000 clients in 70 countries
Tracking sales leads and prospectsBegan with Excel spreadsheetsSwitched to Access databaseVolume forced move to CRM system
Access controlled through data security and information sharing privileges
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Case 1 Business Benefits of CRM Wyse Technology
World leader in thin-client computingRevenues in excess of $180 millionDoubled sales within 12 months of installing
CRM systemNo additional staff needed
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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?
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What is CRM? Managing the full range of the customer
relationship involvesProviding 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 CRM helps sales, marketing, and service
professionals capture and track relevant data aboutEvery past and planned contact with
prospects and customersOther business and life cycle events of
customers Data are captured through customer touchpoints
Telephone, fax, e-mailWebsites, retail stores, kiosksPersonal contact
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Sales A CRM system provides sales reps with the
tools and data resources they need toSupport and manage their sales activitiesOptimize 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 CRM systems help with direct marketing
campaigns by automatic such tasks asQualifying leads for targeted marketingScheduling and tracking mailingsCapturing and managing responsesAnalyzing the business value of the campaignFulfilling responses and requests
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Customer Service and Support A CRM system gives service reps real-time
access to the same database used by sales and marketingRequests for service are created, assigned,
and managedCall center software routes calls to agentsHelp 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 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 Benefits of CRM
Identify and target the best customersReal-time customization and personalization
of products and servicesTrack when and how a customer contacts
the companyProvide a consistent customer experienceProvide superior service and support across
all customer contact points
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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 preparationNot solving business process problems firstNo participation on part of business
stakeholders involved
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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
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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
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ERP: The Business Backbone ERP is a cross-functional enterprise backbone
that integrates and automates processes withinManufacturingLogisticsDistributionAccountingFinanceHuman resources
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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
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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?
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What is ERP? Enterprise resource planning is a cross-
functional enterprise system An integrated suite of software modulesSupports basic internal business processesFacilitates 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
ERP Business BenefitsQuality and efficiencyDecreased costsDecision supportEnterprise agility
ERP CostsRisks and costs are considerableHardware and software are a small part
of total costsFailure can cripple or kill a business
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Costs of Implementing a New ERP
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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 testingOver-reliance on ERP vendor or consultants
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Trends in ERP
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Supply Chain Management (SCM)
Fundamentally, supply chain management helps a companyGet the right productsTo the right placeAt the right time In the proper quantityAt an acceptable cost
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Goals of SCM The goal of SCM is to efficiently
Forecast demandControl inventoryEnhance relationships with customers,
suppliers, distributors, and othersReceive feedback on the status of every link
in the supply chain
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Case 3 Applying Lean Logistics to SCM
The Tesco supermarket chain is a pioneer in retailingUsed SCM to overcome disadvantage of
weak supplier leverage and expensive logisticsChanged product distribution methods to
reduce labor costs and inventory levelsGot suppliers to ship in smaller quantities,
preconfigured for sales displayReduced total product “touches” from 150 to 50Reduced throughput time from 20 days to 5
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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.
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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 producesFrequently called a value chain
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Supply Chain Life Cycle
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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
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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 Planning
Supply chain designCollaborative demand and supply planning
ExecutionMaterials managementCollaborative manufacturingCollaborative fulfillmentSupply chain event managementSupply chain performance management
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Benefits and Challenges of SCM Key Benefits
Faster, more accurate order processingReductions in inventory levelsQuicker times to marketLower transaction and materials costsStrategic relationships with supplier
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Goals and Objectives of SCM
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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
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Trends in SCM
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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 marketAchieve volume productionObtain high-quality precision manufacturing
Consequences of a new ERP systemOne year to stabilize system$105 million in lost revenue$70 million in lost profits
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Case 4 Consequences of ERP Failure Lessons Learned
Disruptions can be more extensive than expectedEnterprise resource planning is very complexERP 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 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 attemptUses new applications Is being implement department by departmentUses stand-alone systems
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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?