erp & crm information technology and business minder chen, ph.d. [email protected]
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ERP & CRMInformation Technology and Business
Minder Chen, Ph.D.
E-Business - 2 © Minder Chen, 1996-2005
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
E-Business - 3 © Minder Chen, 1996-2005
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
E-Business - 4 © Minder Chen, 1996-2005
What is ERP?
• Software tools
• Manages business systems– Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting, HR
• Allows automation and integration of business processes
• Enables data and information sharing
• Enterprise-wide system
• Introduces “best practices”
E-Business - 5 © Minder Chen, 1996-2005
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
E-Business - 6 © Minder Chen, 1996-2005
Integrated Systems Approach
• Common set of applications/modules
• Usually requires the reengineering business processes according to ERP package’s underlying business model– Better alignment
• Limit your customization– Easier upgrades
• Overcomes inefficiencies of independent systems
• Integrated data supports multiple business functions
E-Business - 7 © Minder Chen, 1996-2005
/ Web-enabled architecture
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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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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
E-Business - 10 © Minder Chen, 1996-2005
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
http://134.198.33.115/sap/1000.htm
E-Business - 11 © Minder Chen, 1996-2005
R/3 Logistics Process Flow
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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
E-Business - 13 © Minder Chen, 1996-2005
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.
E-Business - 14 © Minder Chen, 1996-2005
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
E-Business - 15 © Minder Chen, 1996-2005
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
E-Business - 16 © Minder Chen, 1996-2005
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
E-Business - 17 © Minder Chen, 1996-2005
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
E-Business - 18 © Minder Chen, 1996-2005
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.
E-Business - 19 © Minder Chen, 1996-2005
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
E-Business - 20 © Minder Chen, 1996-2005
Customer Relationship Management (CRM)
The measures an organization takes to – identify,
– select,
– acquire,
– work with, and
– retain
its customers
E-Business - 21 © Minder Chen, 1996-2005
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)
E-Business - 22 © Minder Chen, 1996-2005
Impacts of Web and Internet to CRM
• Customer driven interaction
• Web-Centric architecture
• Permission, 1to1, Personalization, Interactivity, Long-term Dialogue Management
• Focus is on maximizing customer value
• Continuous interaction with customers
E-Business - 23 © Minder Chen, 1996-2005
E-Business - 24 © Minder Chen, 1996-2005
CRM Cycle
Welcom
e
Awareness
GettingTo Know
Win
back
Targeting
Account
Management
Intensive
Care
Pre-Divorce/Divorce
Translate Failure into Success!
The Proof!
"Moments of Truth"
Cross-Selling,Profit Opportunities
Delivery, Welcoming service andContinuous Contact Processes
Sales Processes (Including Business Partners)
Market and Customer Research and analysis
E-Business - 25 © Minder Chen, 1996-2005
Highest Level Business Flow
Source: Oracle.
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Campaign to Lead Business Flow
Source: Oracle.
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Architecture
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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.
E-Business - 30 © Minder Chen, 1996-2005
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
E-Business - 31 © Minder Chen, 1996-2005
The B2C Business Models – Bricks, Clicks, Revolution and Evolution
Bricks Clicks
Bricks & Clicks
• Sat on the sidelines for the explosion • Evolved to online commerce• Online services are incremental• Not huge differentiators for clients• Source of convenience• Took advantage of lessons learned• Assets CHEAP from Click failures
• Mergers or sales of assets to Bricks• Folding bricks ventures into portfolio• Narrow focus of offerings
eBay, Amazon, Webvan, Wingspan Bank, Yahoo
Gap, Safeway, Wallmart
• Bricks organizations set up separate click organizations to give the required freedom to operate in the fast moving Click environment
or• Clicks organizations were created through VC capital
Wells Fargo, Safeway, Barnes and Noble
E-Business - 32 © Minder Chen, 1996-2005
A Taxonomy for System
Development Methodologies &
Strategies
E-Business - 33 © Minder Chen, 1996-2005
Commercial Application Package Implementation Strategy