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
Learning Objectives
 Identify and give examples to illustrate the
following aspects of customer relationship,
enterprise research, and supply chain
management systems
 Business processes supported
 Customer and business value provided
 Potential challenges and trends

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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 month
 12,000 clients in 70 countries
 Tracking sales leads and prospects
 Began with Excel spreadsheets
 Switched to Access database
 Volume 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 computing
 Revenues in excess of $180 million
 Doubled sales within 12 months of installing
CRM system
 No 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 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

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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 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

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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

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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

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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
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

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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 customers
 Real-time customization and personalization
of products and services
 Track when and how a customer contacts
the company
 Provide a consistent customer experience
 Provide 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 preparation
 Not solving business process problems first
 No 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 within
 Manufacturing
 Logistics
 Distribution
 Accounting
 Finance
 Human 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 modules
 Supports basic internal business processes
 Facilitates 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 Benefits
 Quality and efficiency
 Decreased costs
 Decision support
 Enterprise agility
 ERP Costs
 Risks and costs are considerable
 Hardware and software are a small part
of total costs
 Failure 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 testing
 Over-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 company
 Get the right products
 To the right place
 At the right time
 In the proper quantity
 At an acceptable cost

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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

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Case 3 Applying Lean Logistics
to SCM
 The Tesco supermarket chain is a pioneer in
retailing
 Used SCM to overcome disadvantage of
weak supplier leverage and expensive logistics
 Changed product distribution methods to
reduce labor costs and inventory levels
 Got suppliers to ship in smaller quantities,
preconfigured for sales display
 Reduced total product “touches” from 150 to 50
 Reduced 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 produces
 Frequently 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 design
 Collaborative demand and supply planning
 Execution
 Materials management
 Collaborative manufacturing
 Collaborative fulfillment
 Supply chain event management
 Supply chain performance management

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Benefits and Challenges of SCM
 Key Benefits
 Faster, more accurate order processing
 Reductions in inventory levels
 Quicker times to market
 Lower transaction and materials costs
 Strategic 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 market
 Achieve volume production
 Obtain high-quality precision manufacturing
 Consequences of a new ERP system
 One 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 expected
 Enterprise resource planning is very complex
 ERP 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 attempt
 Uses new applications
 Is being implement department by department
 Uses 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?

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