enterprise resource planning and customer relationship management (erp and crm)

Enterprise Resource Planning and

Customer Relationship Management

(ERP and CRM)

Minder Chen, Ph.D.

Professor of MIS

Martin V. Smith School of Business and Economics

CSU Channel [email protected]

mailto:[email protected]

ERP & CRM - 2 © Minder Chen, 1996-2014

ERP Market

http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-update-sap-solidifies-market-leadership/

ERP: Enterprise Resource Planning

http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-update-sap-solidifies-market-leadership/


Major Global Software Firms

Source: http://www.forbes.com/global2000/list/ under software and programming

http://www.forbes.com/global2000/list/


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


What is ERP?

• Enterprise-wide application packages

• Manage business processes/functions via various modules

– Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR

• Allow automation and integration of business processes

• Enable data and information sharing

• Incorporate and implement “best practices”


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


Major Vendors

• SAP – SAP Business One

http://en.wikipedia.org/wiki/SAP_Business_One – http://www.sap.com/solutions/business-suite/erp/demos/index.epx

• Oracle e-Business Suite– PeopleSoft

• Microsoft – 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

http://en.wikipedia.org/wiki/List_of_ERP_vendors

http://en.wikipedia.org/wiki/SAP_Business_One

http://www.sap.com/solutions/business-suite/erp/demos/index.epx

http://www.microsoft.com/dynamics/default.mspx

http://www.microsoft.com/dynamics/product/experience.mspx

http://www.microsoft.com/dynamics/ax/product/demos.mspx


Other Vendors (II)

• QAD: Providing innovative enterprise software and services for global manufacturers

– http://www.qad.com/erp/

• Salesforce.com for CRM– Software as a service (SaaS) Cloud computing

– 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

http://www.qad.com/erp/

http://www.salesforce.com/

http://www.netsuite.com/portal/home.shtml

http://www.netsuite.com/portal/resource/edemo_main.shtml

http://quickbooks.intuit.com/index.jsp

http://office.microsoft.com/en-us/accountingexpress/default.aspx


Anatomy of an Enterprise System

Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport


Integrated Systems Approach

• Common set of applications/modules

• Overcomes inefficiencies of independent systems

• Integrated data supports multiple business functions

• Limit your customization– Easier upgrades

• Consider reengineering business processes according to ERP package’s underlying business model (reference model / blueprint)– Better alignment, best practices, less customization


/ Web-enabled architecture


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


ERP: Business Processes Overview

SalesSalesSalesSales

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

SOP: Sales & Operations Planning; MPS: Master Production Schedule http://134.198.33.115/sap/1000.htm

http://134.198.33.115/sap/1000.htm


MRP Information Flow

Demand Management

(MPS)MRP

Bill of Materials

(BOM)

Purchase Requisition

Outstanding Purchase

Orders

Stock(Inventory)

Sales Planning & Forecasting

1 2 3 4 5 6ABCEF

LT: Lead Time


R/3 Logistics Process FlowSAP R/3 Typical Business Blueprint


Commercial Application Package’s 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.

Source: Preparing and Evaluating A Request for Proposals: How to Select a Vendor (link)

http://www.nagdca.org/content.cfm/id/preparing_and_evaluating_a_request_for_proposals


Gap Analysis and Strategies to Reduce Gaps

Redesign the firm’s business processes

Define business requirements and the firm’s processes / procedures / business rules

Conduct detailed gap analysis & Determine ways to reduce the gap

Assess and explore ERP Packages’ functionality & its underlying Reference Model

Customize the package

Gap Analysis

Big gap

Develop a custom-built solution

Select the best fit ERP packageSmall gap

AS-IS vs.TO-BE Assume the selected ERP package has the

best practices

Consider costs of customization and

future upgrades


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

Evolve system

Tune system performance

Create end-user procedures documentation & training

This process assumes that a software package has been selected.


Why Do ERP Projects Often Fail?

• Under-estimate the complexity of planning, development, and training for ERP implementation.

• Fail to involve affected employees in planning and implementation

• Try to do too much too fast

• Provide insufficient training for ERP users

• Do not conduct sufficient data conversation and testing

• Rely too much on ERP vendors or consultants (you cannot outsource your problems away)

http://ramialsindi.wordpress.com/2011/10/24/week-10-enterprise-resource-planning/

http://ramialsindi.wordpress.com/2011/10/24/week-10-enterprise-resource-planning/


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 and follow a proven formula

• Understand the system’s capabilities

• Explore new technology solutions

• Execute your implementation in phases

• Customize by prototyping

• Maintain a close relationship with your vendors


ERP Benefits Framework

Source: Shari Shang & Peter Seddon, Assessing and managing the benefits of enterprise systems: the business manager’s Perspective, Info Systems Journal, (2002) 12, pp. 271–299 at http://cba.uah.edu/guptaj/m680/erpbenefits.pdf


Benefits Achieved by Organizations

Improved financial management

Faster, more accurate transactions

Improved inventory & asset mgt

Ease of expansion & increased flexibility

Cycle time reduction

Improved customer service

Headcount reduction

Improved logistics

Increased revenue

Better managerial decision making


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: Shari Shang and Peter Seddon


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

Stabilizatio

nContinuous

Improvement

Transformatio

n

Source: Ross & 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.

Low employee morale due to extra work, mismatched processes, data errors and changepressures

Under Promise and over Deliver


Why Do Problems Occur after "Go Live"?

Factors that might explain why problems occur after go live (packages or websites):

1. Poor project management including poor decisions regarding requirements and design specifications during the implementation project

2. Inappropriate software choice and configuration, resulting in poor fit

3. Lack of business and technical knowledge on part of implementation team and users

4. Lack of testing before “go live”

5. Poor change management

The star witness HealthCare.Gov went live Oct. 1, 2013


Customer Relationship Management (CRM)

“The purpose of a business is to get and keep customers. ”* - Peter Drucker

*Source: http://www.forbes.com/sites/petercohan/2012/10/01/four-ways-start-ups-can-get-and-keep-customers/print/

Watch https://www.salesforce.com/form/conf/crm-sales-indexpage-demo.jsp


Customer Relationship Management (CRM)

The measures an organization takes to – Identify,

– Select,

– Acquire,

– Work with,

– Retain

– Grow

its customers

Companies spend two to 20 times as much finding new customers as they do keeping old ones.


Customer Relationship in Business Model Canvas

Source: Steve Blank, The Startup Owners Manual.

http://www.businessmodelgeneration.com/canvas


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)


Customer Management Activities

Touch PointsMoments of Truth (MOT)


Highest Level Business Flow

Source: Oracle.

http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/


Get, Keep, and Grow Customers

Source: Steve Blank, The Startup Owners Manual.


Complexity of CRM

Source: http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/

/service


CRM Architecture

Collaborative CRM Operational CRM Analytical CRM

ODS: Operational Data Stores

ERP & CRM - 35 © Minder Chen, 1996-2014Source: http://www.sugarforge.org/screenshots/screenshot.php/6/1861/fullsize/Accounts.jpg

An Open Source CRM Solution

ERP & CRM - 36 © Minder Chen, 1996-2014http://www.sugarforge.org/screenshots/screenshot.php/6/1862/fullsize/Home-Dashboard.jpg


Salesforce.Com Example

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.


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


ERP-CRM-SCM Implementation

Software

• Package (proprietary or open source)

• Hosting Solution (SaaS)

• Custom-built

Development Teams/Staffing

• In-house staff

• Outsourcing firms: – Systems integrator/IT consulting firm (onsite vs.

offsite)

– Offshoring: SI firms outside US (e.g., Tata Consultancy Services, Wipro, Infosys)

– BPO (Business Process Outsourcing) vs. ITO


Backup Slides


A Taxonomy for System

Development Methodologies &

Strategies


Sucessive Platforms for Enterprise Applications

Source: IDC, at http://resources.idgenterprise.com/original/AST-0104779_IDC_SAP_and_the_transition_to_the_3rd_platform_for_enterprise_applicatio_.pdf


Commercial Application Package Implementation Strategy


Social Media CRM

• "Companies have departments dedicated to surfing the Internet and making sure their brands are protected," says Sherry.

• Many firms have separate Twitter handles for help, such as @ComcastCares, @DeltaAssist, and @Zappos_Service. AT&T invites consumers to use Facebook and Twitter to reach the company, calling the service "social media customer care."


Customer Management Activities

enterprise resource planning and customer relationship management (erp and crm)

Documents

crm minder chen

programming erp crm

lineerp crm

customizationerp crm

davenporterp crm

vendorserp crm

business processesfunctions

erp packages