enterprise business systems

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

Chapter 8 Enterprise Business Systems 2

Identify and give examples to illustrate the following aspects of customer relationship, enterprise research, and supply chain management systemsBusiness processes supportedCustomer and business value providedPotential challenges and trends

Learning Objectives


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


Case 1 Business Benefits of CRM Forex Capital Markets trades $20 billion

worth of currency per month12,000 clients in 70 countries

Tracking sales leads and prospectsBegan with Excel spreadsheetsSwitched to Access databaseVolume forced move to CRM system

Access controlled through data security and information sharing privileges


Case 1 Business Benefits of CRM Wyse Technology

World leader in thin-client computingRevenues in excess of $180 millionDoubled sales within 12 months of installing

CRM systemNo additional staff needed


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?


What is CRM? Managing the full range of the customer

relationship involvesProviding 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


Application Clusters in CRM


Contact and Account Management CRM helps sales, marketing, and service

professionals capture and track relevant data aboutEvery past and planned contact with

prospects and customersOther business and life cycle events of

customers Data are captured through customer touchpoints

Telephone, fax, e-mailWebsites, retail stores, kiosksPersonal contact


Sales A CRM system provides sales reps with the

tools and data resources they need toSupport and manage their sales activitiesOptimize cross- and up-selling

CRM also provides the means to check on a customer’s account status and history before scheduling a sales call


Marketing and Fulfillment CRM systems help with direct marketing

campaigns by automatic such tasks asQualifying leads for targeted marketingScheduling and tracking mailingsCapturing and managing responsesAnalyzing the business value of the campaignFulfilling responses and requests


Customer Service and Support A CRM system gives service reps real-time

access to the same database used by sales and marketingRequests for service are created, assigned,

and managedCall center software routes calls to agentsHelp desk software provides service data

and suggestions for solving problems Web-based self-service enables customers to

access personalized support information


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


The Three Phases of CRM


Benefits of CRM Benefits of CRM

Identify and target the best customersReal-time customization and personalization

of products and servicesTrack when and how a customer contacts

the companyProvide a consistent customer experienceProvide superior service and support across

all customer contact points


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 preparationNot solving business process problems firstNo participation on part of business

stakeholders involved


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


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


ERP: The Business Backbone ERP is a cross-functional enterprise backbone

that integrates and automates processes withinManufacturingLogisticsDistributionAccountingFinanceHuman resources


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


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?


What is ERP? Enterprise resource planning is a cross-

functional enterprise system An integrated suite of software modulesSupports basic internal business processesFacilitates business, supplier, and customer

information flows


ERP Application Components


ERP Process and Information Flows


Benefits and Challenges of ERP

ERP Business BenefitsQuality and efficiencyDecreased costsDecision supportEnterprise agility

ERP CostsRisks and costs are considerableHardware and software are a small part

of total costsFailure can cripple or kill a business


Costs of Implementing a New ERP


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 testingOver-reliance on ERP vendor or consultants


Trends in ERP


Supply Chain Management (SCM)

Fundamentally, supply chain management helps a companyGet the right productsTo the right placeAt the right time In the proper quantityAt an acceptable cost


Goals of SCM The goal of SCM is to efficiently

Forecast demandControl inventoryEnhance relationships with customers,

suppliers, distributors, and othersReceive feedback on the status of every link

in the supply chain


Case 3 Applying Lean Logistics to SCM

The Tesco supermarket chain is a pioneer in retailingUsed SCM to overcome disadvantage of

weak supplier leverage and expensive logisticsChanged product distribution methods to

reduce labor costs and inventory levelsGot suppliers to ship in smaller quantities,

preconfigured for sales displayReduced total product “touches” from 150 to 50Reduced throughput time from 20 days to 5


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.


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 producesFrequently called a value chain


Supply Chain Life Cycle


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


Typical EDI Activities


Roles and Activities of SCM in Business


Planning & Execution Functions of SCM Planning

Supply chain designCollaborative demand and supply planning

ExecutionMaterials managementCollaborative manufacturingCollaborative fulfillmentSupply chain event managementSupply chain performance management


Benefits and Challenges of SCM Key Benefits

Faster, more accurate order processingReductions in inventory levelsQuicker times to marketLower transaction and materials costsStrategic relationships with supplier


Goals and Objectives of SCM


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


Trends in SCM


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 marketAchieve volume productionObtain high-quality precision manufacturing

Consequences of a new ERP systemOne year to stabilize system$105 million in lost revenue$70 million in lost profits


Case 4 Consequences of ERP Failure Lessons Learned

Disruptions can be more extensive than expectedEnterprise resource planning is very complexERP 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


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 attemptUses new applications Is being implement department by departmentUses stand-alone systems


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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