e-business - 1 © minder chen, 1996-2005 erp & scm & crm information technology and business...
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E-Business - 1 © Minder Chen, 1996-2005
ERP & SCM & CRMInformation Technology and Business
Minder Chen, [email protected]
Martinique Landscape, Paul Gauguin
E-Business - 2 © Minder Chen, 1996-2005
The Extended Enterprise
E-Business: Virtual and Dynamic Enterprise
SuppliersBackOffice
FrontOffice
Customers
Buy Make/Add Value Sell
Supply Chain Back Office Integration Demand Chain
ManufacturingFinance, HREngineering
SalesSupport/Service
Marketing
Supply Chain Management Customer Relationship Management
Enterprise Resource Planning
© Minder Chen, 2001-2002
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A Federation of Information Systems
Customer Relationship Management (CRM)
(Service)
B2B
B2CB2B
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E R P
Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport
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ERP Market
• One of the fastest growing markets in software industry
• 34.5% of companies with revenues over $1 billion plan to purchase or upgrade
• $180 billion in sales in 2002
• Maybe as much as $1 trillion by 2010
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ERP Systems
• Major investment– Cost between $50,000 and $100,000,000+
• Variety of business justifications– Replace legacy systems
– Reduce cycle times
– Lower operating costs
– Enables better management decisions» Real-time
» On-line
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What is ERP?
• Software application packages
• Manage business processes and functions – Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting, HR
• Allow automation and integration of business processes
• Enable data and information sharing
• Enterprise-wide system
• Introduces “best practices”
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Evolution of ERP• 1960s: software packages with inventory
control
• 1970s: MRP systems– Production schedule with materials management
• 1980s: MRPII systems– Adds financial accounting system
• 1990s: MRPII– Integrated systems for manufacturing execution
• Late 1990s: ERP– Integrated manufacturing with supply chain
• Late 1990s and 200X: SCM & CRM
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Integrated Systems Approach
• Common set of applications/modules• Usually requires the reengineering business
processes according to ERP package’s underlying business model (reference model)
– Better alignment
• Limit your customization– Easier during version upgrades
• Overcomes inefficiencies of independent systems
• Integrated data supports multiple business functions
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Major Vendors• Microsoft Dynamics
– http://www.microsoft.com/dynamics/default.mspx
– http://www.microsoft.com/dynamics/product/experience.mspx#EWC
– http://www.microsoft.com/dynamics/ax/product/demos.mspx
• Oracle e-Business Suite– PeopleSoft
• SAP – SAP Business One http://en.wikipedia.org/wiki/SAP_Business_One – http://www.sap.com/solutions/business-suite/erp/demos/index.epx
http://en.wikipedia.org/wiki/List_of_ERP_vendorshttp://panorama-consulting.com/resource-center/2010-erp-vendor-analysis/
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Major Vendors
• Salesforce.com – Software as a service (SaaS)
– http://www.salesforce.com
• NetSuite – http://www.netsuite.com/portal/home.shtml– http://www.netsuite.com/portal/resource/edemo_main.shtml
• QuickBooks– http://quickbooks.intuit.com/index.jsp
• Microsoft Accounting Express– http://office.microsoft.com/en-us/accountingexpress/default.aspx
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ERP Market Share
Sample Vendors
Tier I Tier II Tier IIII
SAPOracle
Oracle eBusiness SuiteOracle JD EdwardsOracle Peoplesoft
Misrosoft Dynamics
EpicorSageInforIFS
QADLawson
CDC Software
ABASActivant Solutions Inc.
Bowen and GrovesCompiere
ExactNetSuiteVisibility
CGSHansa World
ConsonaSyspro
http://whatiserp.net/erp-comparison/erp-vendor-evaluation-2010/
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/ Web-enabled architecture
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The Basic Instance of SAP
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Candidate HR Instance of SAP
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Sap modules
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ERP: Business Processes Overview
SalesSalesSales
ProductionProductionProductionProduction
PurchasingPurchasingPurchasingPurchasing
CustomerCustomerCustomerCustomerorderorderorderorder
SOPSOPSOPSOP MPSMPSMPSMPS MRPMRPMRPMRPPlannedPlannedPlannedPlanned
orderorderorderorder
DeliveryDeliveryDeliveryDelivery InvoicingInvoicingInvoicingInvoicing
Prod.Prod.Prod.Prod.controlcontrolcontrolcontrol
PurchasePurchasePurchasePurchaserequisite.requisite.requisite.requisite.
VendorVendorVendorVendorselectionselectionselectionselection
GoodsGoodsGoodsGoodsissueissueissueissue
InvoiceInvoiceInvoiceInvoiceverificat.verificat.verificat.verificat.
Financial ControllingFinancial ControllingFinancial ControllingFinancial Controlling
Cost ControllingCost ControllingCost ControllingCost Controlling
Logistics ControllingLogistics ControllingLogistics ControllingLogistics Controlling Sales, Production, Purch., Warehouse MgmtSales, Production, Purch., Warehouse Mgmt
Sales orderSales order CustomerCustomerCustomerCustomerpaymentpaymentpaymentpayment
VendorVendorVendorVendorpaymentpaymentpaymentpayment
InitialInitialInitialInitialContactContactContactContact
InventoryInventoryInventoryInventorySourcingSourcingSourcingSourcing
Prod.Prod.Prod.Prod.orderorderorderorder
PurchPurchPurchPurch ....orderorderorderorder
http://134.198.33.115/sap/1000.htm
SOP: Sales and Operations Planning MPS: Master Production Schedule; MRP: Material Requirements Planning
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R/3 Logistics Process Flow
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Collaborative Business Map
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E-Business Building Blocks
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The Flow of Your Implementation Process
Define project scope & organization
Install software
Define & build technical infrastructures
Train project team
Perform fit/gap analysis
Build and test prototypes
Convert data
Develop interfaces
Perform testing
Go live
Support system after conversion
Create end-user procedures documentation & training
Evolve system
Tune system performance
Please also refer to for Selection ERP Softwarehttp://en.wikipedia.org/wiki/ERP_System_Selection_Methodology
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Commercial Application Package Implementation Strategy
• Commercial application package – a software application that can be purchased and customized to meet the business requirements of a large number of organizations or a specific industry. A synonym is commercial off-the-shelf (COTS) system.
– Request for proposal (RFP) – a formal document that communicates business, technical, and support requirements for an application software package to vendors that may wish to compete for the sale of that application package and services.
– Request for quotation (RFQ) – a formal document that communicates business, technical, and support requirements for an application software package to a single vendor that has been determined as being able to supply that application package and services.
– Gap analysis – a comparison of business and technical requirements for a commercial application package against the capabilities and features of a specific commercial application package for the purpose of defining the requirements that cannot be met.
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Implementation Success Factors
• Understand your business objectives
• Assemble a dedicated project team with the appropriate skills
• Recognize and capitalize on re-engineering opportunities
• Leverage the experience of others
• Understand the system’s capabilities
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Implementation Success Factors
• Explore new technology solutions
• Execute your implementation In phases
• Customize by prototyping
• Maintain a close relationship with your vendors
• Follow a proven formula
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Benefits achieved by organizations
2
5
1
8
4
9
7
3
6
10
Improved financial management
Faster, more accurate transactions
Improved inventory & asset mgt
Ease of expansion & incr. flexibility
Cycle time reduction
Improved customer service
Headcount reduction
Improved logistics
Increased revenue
Better managerial decision making
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Maximizing Benefits from Enterprise Systems
Evolving Functionality
Sophisticated Knowledge
Application Infrastructure
Packaged SoftwareFeatures
Operational Benefits
Managerial Benefits
Strategic Benefits
IT infrastructure Benefits
Organizational Benefits
Distinctive Characteristics of Packaged EnterpriseApplication Software (PEAS)
Evolutionary Spiral of PEAS & Process Change and Management Initiatives
Net Benefits from ES Use
Use ES to Generate Benefits
Monitor Changing Conditions & Reevaluate Benefits
Initiatives to Manage the Distinctive Characteristics of the PEA Software
Another cycle of ES Exploration, Redesign and Use
Changes to Process
Assess and Explore Processes
Agree on RedesignedProcesses
Assess and Explore PEAS Changes
to PEAS
Achieving Fit between PEAS and Business needs
Source: http://www.dis.unimelb.edu.au/staff/peter/615-260webraft/pub/index.html
Customize the package
Reengineer processes
Gap
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When, in the years after "go live", are net benefits realized?
• One of the most consistent findings reported in the literature is that there is a dip in organizational performance in the six to twelve months after "go live".
Design
ImplementationStabilization
ContinuousImprovement
TransformationRoss & Vitale (1998)
• A possible explanation for the above pattern is organizational learning, the time taken for people in the organization to really understand their role in the new processes.
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Why do benefits and problems occur in the years after "go live"?
Factors that might explain why benefits and problems occur after go live:
1. Poor project management including poor design-stage decisions during the implementation project
2. Inappropriate software choice and configuration, resulting in poor fit
3. Lack of knowledge on part of implementation team and users
4. Poor change management
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SCOR Reference Model
The Supply Chain Council (SCC) developed a Supply Chain Operations Reference Model (SCOR) as a cross-industry process reference model for supply chain management.
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Supply Chain Management
Procurement
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A Case Study
• Used CNET.com for reviews and vendors list of a Tablet PC via
• Called BestBuy government and education sale
• Confirmed order
• Later told that they it did not have it in stock at the promised delivery date.
• Order cancelled but then shipped by UPS without obtaining a signiture.
• Took two days to get authorized return
• Ordered from another vendor, and shipped by FedEx, missed the delivery, went to FedEx station to pickup
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Fulfillment by Amazon
• http://www.amazonservices.com/content/fulfillment-by-amazon.htm#how-it-works
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Bullwhip Effect in Supply Chain
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Demand-Driven Supply ChainSCM ERP CRM
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Increasing Variability of Orders up the Supply Chain
The Bullwhip Effect in Supply Chains, Hau L. Lee, V. Padmanabhan and Seungjin Whang, Sloan Management Review, April 15, 1997
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Higher Variability in Orders from Dealer to Manufacturer than Actual Sales
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Bullwhip Effect due to Seasonal Sales of Soup
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A Framework for Supply Chain Coordination Initiatives
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B2B Data Exchange: Existing Methods - EDI messages
• UN standard format (EDIFACT) or X.12
• Compact strings, with numeric qualifiers. Strict limitation on the number of characters and position of data in a document.
• Example:
• UNH+900576+ORDERS:D:93A:UN:EAN007’BGM+220+H940568’DTM+137:19940201:102’NAD+BY+5412345000176::9’NAD+SU+4012345000094::9’LIN+2’PIA+5_1857990455:IB’IMD+F+BAU+:::Farell J G’IMD+F+BTI+:::The Singapore Grip’QTY+21:1’PRI+XXX:7.99’UNS+S’CNT+2:2’UNT+15+900576’
• Rules for data type control
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XML
eXtensible Markup Language
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EDI and XML
EDI VAN
EDI EDI
XML XML
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BizTalk
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Trading PartnersSuppliersDistributorsBusiness Partners
E-Business Integration Imperatives
Heterogeneous PlatformsERP Application PackagesProprietary ApplicationsLegacy Applications
Consumers
REQUIREMENTSStandards based integrationConfigurable across applicationsBusiness process orientedLoosely coupledSupports an incremental approachScaleable, available, secure, manageable
B2BIntegration
EAI
B2CInternet /
Virtual Private Network
SouthWest.com
Dollars.com
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ProcurementWeb services
Registry
Web Services Repository Interfaces
RepositoryManagementSubsystem
Public UDDI
eProcurementAgent
(implemented in Web Services)
eProcurementApplication
(Mobile Interface)
eProcurementApplication
(Windows Interface)
eProcurementUser Interface Subsystem
(Web Interface)
Web Services Provided by supplier 1
Web Services Provided by supplier …
Web Services Provided by supplier N
Internet
e-Procurement Case Study
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Data Model of the Private Web Services Registry
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Prototype
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Customer Relationship Management (CRM)
The measures an organization takes to – identify,
– select,
– acquire,
– work with, and
– retain
its customers
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Objectives of CRM
• The right offer (products or services)
• To the right person (target marketing)
• At the right time (spacing outbound calls)
• Through the right channel (direct vs. channel)
• Via appropriate media (phone, email, Web)
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Highest Level Business Flow
Source: Oracle.
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CRM Framework
Key EventsThe Moment of Truth (MOT)==KPI and continuously improvement
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RFM and LTV
• Recency - How recently a customer has purchased?
• Frequency - How often he purchases?
• Monetary Value - How much does she spend?
Source: http://en.wikipedia.org/wiki/RFM and http://www.jimnovo.com/RFM-tour.htm
• Life Time Value(LTV) or Lifetime Customer Value (LCV)
Source: http://en.wikipedia.org/wiki/Customer_lifetime_value http://www.jimnovo.com/LTV.htm
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CRM Architecture
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Digital Dashboard for Sales Process
Advertise your business on Google
Take five minutes to write your ad and select a couple keywords—even target your ad locally.
People click on your ad
When people search on Google, your ad is displayed and traffic is driven to your site.
Convert leads into customers
Update deal information, track opportunity milestones, and record all opportunity-related interactions.
Capture leads from your Web site
Prospects fill out a Web form, which creates a lead in Salesforce that is routed to your sales team.
Manage customer relationships
Acquire deep knowledge of every account, facilitate collaboration, and build and maintain strong, lasting customer relationships.
Manage the follow-up process
Log calls, send emails, and update the status of your leads so that you never miss an opportunity.
Month-to-Date Trending Closed Business by Month Top Sales RepsTop 10 Deals
Presentation Proposal Negotiation WonYesNo
Open Opportunities
You can monitor your opportunities reports and dashboards to keep track of your top deals and prioritize your time.
Customize Salesforce to fit your internal sales methodologies and processes, making it easier to monitor your sales pipeline.
Use email marketing and call downs to re-market to your archived opportunities.
Keep an archive of your dead opportunities.
Salesforce gives your entire company a 360-degree view of your customers and facilitates collaboration across your organization, helping you build strong, lasting customer relationships.
Sales
Support
Marketing
New Customers
Close More Deals
Close deals faster by providing a single place for updating deal information, tracking opportunity milestones, and recording interactions.Easily analyze your sales pipeline so you can quickly identify and eliminate any bottlenecks in the sales cycle.
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ERP, CRM, SCM Implementation
Software
• Package (proprietary or open source)
• Hosting Solution (SaaS)
• Custom-build
Staffing
• In house staff
• Systems integration/Consulting firm
• Onsite / onshore / near shore/ offshore outsourcing
• Reshoring
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Classification of Outsourcing: Service Types
• Manufacturing Outsourcing– FoxConn’s eCMMS stands for e-enabled
Components, Modules, Moves and Services
– TSMC emphasizes collaborative services*
• Information Technology Outsourcing
• Business Process Outsourcing
• Knowledge Processing Outsourcing
• Innovation Outsourcing
*See http://www.tsmc.com/english/c_services/c00_Service_Guide/c0100_Service_Guide.htm
Smart sourcing: Beyond “lift and shift”.
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Backup Slides
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A Taxonomy for System
Development Methodologies &
Strategies
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Commercial Application Package Implementation Strategy
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R
Procurement Tasks
MaterialsPlanning
Invoice Verification
InternalInternal and and ExternalExternalAccountingAccounting
Sales andDistribution
Master Data
MaterialBatchesVendorsG/L accountsStorage bins Goods Receipt Transfer
Posting
GoodsIssue
InvoiceReceipt
Inventory Management
Internal ProcurementProduction
External Procurement
Purchasing
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SAP pursues a global purchasing strategy
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http://upload.wikimedia.org/wikipedia/en/6/6a/Manufacturating_Resource_Planning.jpg
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Strategy Development
Process
Value Creation
Process
Multi-channel Integration
Process
Performance Assessment
Process
Information Management Process
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