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 Chapter

7-8

Electronic Business Systems

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

• Identify the following cross-functional enterprise

systems, and give examples of how they can
provide significant business value to a company
• Enterprise application integration
• Transaction processing systems
• Enterprise collaboration systems

7-3
 Learning Objectives

• Give examples of how Internet and other

information technologies support business
processes within the business functions of
• Accounting
• Finance
• Human resource management
• Marketing
• Production
• Operations management

7-4
 Enterprise Business Systems

• E-business means using the Internet, other

networks, and IT to support
• Electronic commerce
• Enterprise communications and collaboration
• Web-enabled business processes
• E-commerce is the buying, selling, and
marketing of products, services, and information
over the Internet and other networks

7-5
Enterprise Application Architecture

7-6
 Enterprise Application Architecture

• Provides a conceptual framework

• Helps visualize the basic components, processes,
and interfaces of major e-business applications
• Focuses on accomplishing fundamental
business processes in concert with
• Customers
• Suppliers
• Partners
• Employees

7-7
 Enterprise Application Architecture

• Enterprise Resource Planning (ERP)

• Concentrates on the efficiency of internal
production, distribution, and financial processes
• Customer Relationship Management (CRM)
• Focuses on acquiring and retaining profitable
customers via marketing, sales, and services
• Partner Relationship Management (PRM)
• Aims at acquiring and retaining partners who
can enhance the selling and distribution of
products and services

7-8
 Enterprise Application Architecture

• Supply Chain Management (SCM)

• Focuses on developing the most efficient and
effective sourcing and procurement processes
• Knowledge Management (KM)
• Focuses on facilitating internal group
collaboration and decision support

7-9
 Enterprise Application Integration

• EAI software connects cross-functional systems

• Serves as middleware to provide
• Data conversion
• Communication between systems
• Access to system interfaces

7-10
How EAI Works

7-11
 Transaction Processing Systems

• Cross-functional information systems that

process data resulting from the occurrence of
business transactions
• Transactions include sales, purchases, deposits,
withdrawals, refunds, and payments
• Online transaction processing (OLTP) is a
real-time system that captures transactions
immediately

7-12
The Transaction Processing Cycle

7-13
Enterprise Collaboration Systems (ECS)

• EC systems are cross-functional information

systems that enhance team and workgroup
• Communication
• Coordination
• Collaboration
• Systems may include
• Networked PC workstations
• Servers
• Databases
• Groupware and application packages

7-14
ECS Tools

7-15
 Functional Business Systems

• A variety of types of information systems

that support the business functions of
• Accounting
• Finance
• Marketing
• Operations management
• Human resource management

7-16
IT in Business

7-17
 Marketing Systems

• Marketing systems are concerned with

• Planning, promotion, and sale of existing
products in existing markets
• Development of new products and new markets
• Better attracting and serving present and
potential customers

7-18
Marketing Information Systems

7-19
 Interactive Marketing

• Interactive Marketing
• A customer-focused marketing process
• Uses the Internet, intranets, and extranets
• Establishes two-way transactions between a
business and its customers or potential customers
• Goal
• Profitably use networks to attract and keep
customers
• Get customers to help create, purchase, and
improve products and services

7-20
 Targeted Marketing

• An advertising and promotion management

concept with five targeting components

7-21
 Targeted Marketing Components

• Community: customized ads to appeal to specific

virtual communities
• Content: ads placed on a variety of selected
websites, aimed at a specific audience
• Context: ads placed on web pages that are
relevant to a product or service
• Demographic/Psychographic: web marketing
aimed at specific types or classes of people
• Online behavior: promotions tailored to each
visit to a site by an individual
7-22
 Sales Force Automation

• Outfit sales force with notebook computers,

web browsers, and sales contact software
• Connect them to marketing websites and the
company intranet
• Goals
• Increase personal productivity
• Speed up capture and analysis of sales data
• Gain strategic advantage

7-23
 Manufacturing Information Systems

• Supports the production/operations functions

• Includes all activities concerned with planning
and control of the processes producing goods
or services

7-24
 Human Resource Management (HRM)

• Information systems designed to support

• Planning to meet personnel needs
• Development of employees to their full potential
• Control of all personnel policies and programs

7-25
HRM Systems

7-26
 Accounting Information Systems

• The oldest and most widely used information

system in business
• Records and reports business transactions and
economic events
• Produces financial statements
• Forecasts future conditions

7-27
 Accounting Information Systems

• Typically consists of
• Order processing
• Inventory control
• Accounts receivable
• Accounts payable
• Payroll
• General ledger systems

7-28
Accounting Information Systems

7-29
 Financial Management Systems

• Supports business managers and professionals

making decisions concerning
• The financing of a business
• The allocation and control of financial
resources within a business

7-30
Financial Management System Example

7-31
 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

8-32
 What is CRM?

• Managing the full range of the customer

relationship involves
• Providing 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

8-33
Application Clusters in CRM

8-34
 Contact and Account Management

• CRM helps sales, marketing, and service

professionals capture and track relevant
data about
• Every past and planned contact with prospects
and customers
• Other business and life cycle events of customers
• Data are captured through customer touchpoints
• Telephone, fax, e-mail
• Websites, retail stores, kiosks
• Personal contact

8-35
 Sales

• A CRM system provides sales reps with the

tools and data resources they need to
• Support and manage their sales activities
• Optimize cross- and up-selling
• CRM also provides the means to check on a
customer’s account status and history before
scheduling a sales call

8-36
 Marketing and Fulfillment

• CRM systems help with direct marketing

campaigns by automatic such tasks as
• Qualifying leads for targeted marketing
• Scheduling and tracking mailings
• Capturing and managing responses
• Analyzing the business value of the campaign
• Fulfilling responses and requests

8-37
 Customer Service and Support

• A CRM system gives service reps real-time

access to the same database used by sales
and marketing
• Requests for service are created, assigned,
and managed
• Call center software routes calls to agents
• Help desk software provides service data
and suggestions for solving problems
• Web-based self-service enables customers
to access personalized support information

8-38
 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

8-39
 Retention and Loyalty Programs

• 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

8-40
 Supply Chain Management (SCM)

• Fundamentally, supply chain management

helps a company
• Get the right products
• To the right place
• At the right time
• In the proper quantity
• At an acceptable cost

8-41
 Goals of SCM

• The goal of SCM is to efficiently

• Forecast demand
• Control inventory
• Enhance relationships with customers, suppliers,
distributors, and others
• Receive feedback on the status of every link in
the supply chain

8-42
 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 produces
• Frequently called a value chain

8-43
Supply Chain Life Cycle

8-44
 Electronic Data Interchange

• EDI
• 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

8-45
Typical EDI Activities

8-46
Roles and Activities of SCM in Business

8-47