Hasrat M.B.A

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MANAGEMENT INFORMATION

SYSTEM

TERM REPORTON

Customer relationship management,Enterprise resource planning

$

E-commerce

Submitted By:(GROUP E)

Naraina VidyaPeeth Management

InstituteGangaganj, Panki, Kanpur-208020

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Index

Customer relationship management.

Enterprise resource planning.

E-commerce.

Group members-

Anjani yadav

Ankita dixit

Priyanka pandey

Mansi singh

Nidhi srivastava

Hasrat wahab.

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Section-1

Customer Relationship

Management

Introduction:

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Today, customers are in charge. It is easier than ever for

customers to comparison shop and, with a click of the mouse,

to switch companies. As a result, customer re1ationsbzps have

become a companys most valued asset. These relationships

are worth more than the company c products, stores, factories,

web addresses, and even employees. Every companys

strategy should address how to find and retain the most

profitable customers possible [9].

The primary business value of customer relationships today isindisputable. Thats why we emphasized in Chapter 2 that

becoming a customer-focused business was one of the top

business strategies that can be supported by information

technology Thus, many companies are implementing customer

relationship management (CRM) business initiatives and

information systems as part of a customer-focused or customer

centric strategy to improve their chances for success in todayscompetitive business environment. In this section, we will

explore basic CRM concepts and technologies, as well as

examples of the benefits and challenges faced by companies

that have implemented CRM systems as part of their customer-

focused business strategy Customer relationship management

systems are enabling businesses of all sizes and industries to

dramatically improve their focus on customer service.

Lets start with a real world example. Read the Real World Case

on the next page. We can learn a lot about the many ways

companies are implementing customer relationship

management systems.

What is CRM?

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Managing the fatal range of the customer relationship involves

two related objectives: one, to provide the organization and all

of its customer-facing employees with a single, complete view

of every customer at every touch point and across all channels;

and, two, to provide the customer with a single, complete view

of the company and its extended channels [26].

Thats why companies are turning to customer relationship

management to improve their customer focus. CRM uses

information technology to create a cross-functional enterprisesystem that integrates and automates many of the customer-

serving processes in sales, marketing, and customer services

that interact with a companys customers. CRM systems also

create an IT framework of Web- enabled software and

databases that integrates these processes with the rest of

company business operations. CRM systems include a family

of software modules that provides the tools that enable abusiness and its employees to provide fast, convenient,

dependable, and consistent service to its customers. Siebel

Systems, Oracle, PeopleSoft, SAP AG, and Epiphany are some

of the leading vendors of CRM software. Figure 8.1 illustrates

some of the major application components of a CRM system.

Lets take a look at each of them.

Contact and Account Management:

CRM software helps sales, marketing, and service professionals

capture and track relevant data about every past and planned

contact with prospects and customers, as well as other

business and life cycle events of customers. Information is

captured from all customer touch points, such as telephone,

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fax, e-mail, the companys website, retail stores, kiosks, and

personal contact. CRM systems store the data in a common

customer database that integrates all customer account

information and makes it available throughout the company via

Internet, intranet, or other network links for sales, marketing,

service, and other CRM applications.

Sales:

A CRM system provides sales reps with the software tools and

company data sources they need to support and manage their

sales activities, and optimize cross-selling and up-selling.

Examples include sales prospect and product information,

product configuration, and sales quote generation capabilities.

CR1vI also gives them real-time access to a single common

view of the customer, enabling them to check on all aspects of

a customers account status and history before scheduling

their sales calls. For example, a CRM system would alert a bank

sales rep to call customers who make large deposits to sell

them premier credit or investment services. Or it would alert a

salesperson of unresolved service, delivery, or payment

problems that could be resolved through a personal contact

with a customer.

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The major application clusters in customer

Relationship management

Marketing

and Fulfillment:

CRIVI systems help marketing professionals accomplish direct

marketing campaigns by automating such tasks as qualifying

leads for targeted marketing, and scheduling and tracking

direct marketing mailings. Then the CRM software helps

marketing professionals capture and manages prospect and

customer response data in the CRM database, and analyzes the

customer and business value of a companys direct marketing

campaigns. CRM also assists in the fulfillment of prospect and

customer responses and requests by quickly scheduling sales

contacts and providing appropriate information on products

and services to them, while capturing relevant information for

the CRM database.

Customer Service and support:

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A CRM system provides service reps with software tools and real-

time access to the common customer database shared by sales

and marketing professionals. CRM helps customer service

managers create, assign, and manage requests for service by

customers. Call center software routes calls to customer

support agents based on their skills and authority to handle

specific kinds of service requests. Help desk software assists

customer service reps in helping customers who are having

problems with a product or service, by providing relevant

service data and suggestions for resolving problems. Web-

based self-service enables customers to easily access

personalized support information at the company website,

while giving them an option to receive further assistance online

or by phone from customer service personnel.

Retention and Loyalty Programs:

Consider the following

It costs six times more to sell to a new customer than to sell to an

existing one.

A typical dissatisfied customer will tell eight to ten people about

his or her experience.

A company can boost its profits 85 percent by increasing its

annual

Customer retention by only 5 percent.

The odds of selling a product to a new customer are 15 percent,

whereas the odds, of selling a product to an existing customer

are 50 percent.

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Seventy percent of complaining customers will do business with

the company again if it quickly takes care of a service problem

[9].

Thats why enhancing and optimizing customer retention and loyalty is a

major business strategy and primary objective of customer

relationship management. CRM systems try to help a company

identify, reward, and market to their most loyal and profitable

customers. CRM analytical software includes data mining tools

and other analytical marketing software, while CRM databasesmay consist of a customer data warehouse and CRM data

marts. These tools are used to identify profitable and loyal

customers and direct and evaluate a companys targeted

marketing and relationship marketing programs toward them.

Figure 8.2 is an example of part of a proposed Web-based

report format for evaluating Charles Schwab & Co.s customer

retention performance.

PHASES OF CRM

The three Phases of CRM:

Figure 8.4 illustrates another way to think about the customer and

business value and component of customer relationship

management. We can view CRM as an integrated system of

Web-enabled software tools and databases accomplishing a

variety of customer-focused business processes that support

the three phases of the relationship between a business and itscustomers [9].

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ACQUIRE-A business relies on CRM software tools and databases to

help it acquire new customers by doing a superior job of

contact management, sales prospecting, selling, direct

marketing, and fulfillment. The goal of these CRM functions is

to help customers perceive the value of a superior product

offered by an outstanding company.

ENHANCE- Web-enabled CRM account management and customer

service and support tools help keep customers happy by

supporting superior service from a responsive networked team

of sales and service specialists and business partners. And

CRIVI sales force automation and direct marketing and

fulfillment tools help companys cross-sell and up sell to their

customers, thus increasing their profitability to the business.

The value perceived by customers is the convenience of one-

stop shopping at attractive prices.

How CRM supports the three phases of the relationship between a

business and its customers.

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RETAIN- CRM analytical software and databases help a company

proactively identify and reward its most loyal and profitable

customers to retain and expand their business via targeted

marketing and relationship marketing programs. The value

perceived by customers is of a rewarding personalized

business relationship with their company.

CRM's Challenges - What's going wrong?

CRM, despite all the talk about it being one of the most 'profitable'

customer strategies of the decade, still allows room for failure.

The most important aspect of CRM problems is its excellent

ability to achieve customer retention but its failure to do

so. This is indirectly responsible for CRM collapse. What

actually is CRM failure and why does it occur? Generally one of

the reasons this happens is because most organizations that

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actually employ CRM, experience a lot of confusion about its

attributes and what it really is. Some would define it as a

business strategy while others view it as something to do with

technology.

The statistics show that only one in every six companies that

have installed CRM has been successful. CRM has lost its

appeal as it has failed to meet expectations. Almost 75% of

projects have not succeeded in delivering the expected ROI

and have faced numerous problems with CRM. However the

absolute failure rate is just 5%. It's mostly the larger corporate

that fail. This happens generally because smaller projects fair

better. Mid size organizations also have a higher success rate.

What are the Problems with CRM?

Exorbitant Costs

One of the problems with CRM is the huge investment needed to

maintain a customer database. The additional expense comes

because of the money needed for computer hardware, software,

personnel etc. The costs involved are enormous and most often

than not the resultant ROI from the CRM implementation fail tocover the costs involved. This leads to a negative feeling within

the company about CRM and its so called successes and

ultimately results in CRM collapse.

Inadequate Focus on Objectives

Secondly when starting off on a CRM strategy the objectives are clearly

established and followed. Management and employees know

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fully well what is needed to work towards organizational goals.

The goals themselves are clearly laid out after meticulous

planning. However midway during the CRM implementation,

when hard times hit, the organization loses sight of its goals

and ultimately steers away from it. At times goals get

interchanged and lose their importance. Companies find

themselves work at home directory towards goals that are less

important and forgetting the ones that really are. This is one of

the fundamental and mostly felt problems in CRM.

Insufficient Resources

Sometimes in phased implementation of CRM, if conditions worsen

within the company or without, organizations start lessening

their budgets for the current phase. When funds are less,

budgets strained, the necessary costs required for CRM

success are not employed. As a result CRM starts failing

midway. The most important aspect- that of maintaining

consistency is lost. Organizations fail to utilize the necessary

resources for success and thus result in failure.

Inappropriate Metrics

Organizations have basically failed to use the right metrics. Failure to

choose the right method of measurement and implement it isone of the chief reasons why CRM fails. Different metrics have

to be employed for the calculation of different goals.

Companies seldom pause to analyze which metric is needed for

which element and ultimately use the wrong one. This results in

faulty measurement and CRM disappointments.

Complex Systems

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CRM simple? The hype says so, the experts agree. Is this really the

case? Organizations that have employed it though have a

different opinion. They are witness to the fact that CRM

packages can be highly complex, with vast amounts of

intricacies. If this is the case then how do simple employees

cope? The answer lies in sufficient training being given in order

that they are able to comprehend and deal with the difficulties

easily.

Business Needs Most Important

One of the chief mistakes companies make is letting the technology

drive their CRM functionality. What's happening is that

companies are endeavoring to go to the industry leaders, gain

the technology needed and then apply it to the business

problems only to find that it isn't solving any of them. Instead

they need to analyze their business problems first and then find

the appropriate CRM solution for it. This backwards step is

responsible for CRM failure.

No Customer Focus

Customer oriented strategy? Yes, CRM does play the part. Customer

oriented employees? Now 'that' requires an effort on the part of

the organization. It needs to motivate employees to beabsolutely customer centric. This involves tremendous effort

on the part of the company but is highly essential. CRM

problems arise because of employee reluctance to be more

customers focused. The result is a highly expensive customer

strategy being adopted by the company in an effort to retain

customers, with reluctant, unfocussed employees

implementing it.

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Slow Returns

Another failure of CRM is its inability to provide quick returns on

investment. Organizations find themselves waiting for years

before they are able to see actual returns on their investment.

Most experts view the low ROI as a major problem with CRM

but fail to see that the long wait is just as difficult. Waiting for

years to see their investments show results, tests patience and

leads to both employees and management slackening their

efforts in the implementation.

Most CRM problems can be mitigated, resolved and ultimately

obliterated. What is highly required is the ability to focus on the

business needs, choose Right resources and assume the right

metrics. Adopting these measures would go a long way in

alleviating CRM problems.RM package that works towards it,

employ the

CRM SUCCESS

Reasons for CRM Success

Set the CRM Vision: Clear and Definable Goals and Expectations

An old proverb said that you can go anywhere as long as you start from

where you are, not from where you think or wish you might be.

Leading a CRM effort starts with looking at your company as customers

do. How is your customer relationship management operating

now? Top executives should take steps such as answering an

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ad, calling your toll-free number for service, placing an order,

and signing up to get emails.

In a successful initiative, your entire company will be deepening its

ability to see better from the customer's point of view.

What are your company's value proposition and competitive advantage

in their eyes? How can you improve each of these attributes?

How do your employees answer these questions?

What customer needs can you serve better?

What feedback mechanisms can you set up to measure these

perceptions -- both now and after CRM implementation? You'll

need these mechanisms to carefully quantify the business case

for your CRM effort. The feedback you gather will document

your eventual progress. It's critical that you develop objectives

that are measurable, and have key performance metrics in

place.

As you become customer-centric, look at your competitors the way your

customers see them. What are competitors doing for your

customers that the customers like?

Less-successful CRM initiatives, instead of looking from the customer'spoint of view at the company, look from the company's point of

view at the customer, in an effort to extract more value.

Gather Requirements Carefully

Your business units and the IS department must agree on what

customer-related data is needed, where it will come from, and

how it will be gathered and distributed.

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It's critical to prioritize the order in which business areas, such as

marketing, sales and service, will be addressed.

It may be wise to have executives from the marketing, sales and service

areas are on a CRM committee, as they lead the teams that will

benefit most from the CRM effort.

This is the time to re-engineer your business processes with the optimal

customer experience in mind. It's also an opportunity to

increase procedural effectiveness and reduce costs. For

instance, a well-thought-out system can eliminate and reduce

the duplicate manual entry of customer data. Youre automating

processes. Don't make the mistake some businesses do of

automating bad ones.

Set the Implementation Strategy Carefully

Choose small, well-defined parameters for your pilot program, andspend time refining the key performance indicators. Remember

the old saying that "you can't improve what you can't

measure."

Make sure you have a project leader who has the experience to manage

project scope carefully. It's inevitable that change requests will

occur, and they'll likely put great pressure on the budget,

timeline, and overall chances of success. Keep focused on

Your initial milestones and be sure to deliver them. Avoid the natural

tendency to try to do too much too soon.

Motivate and Train Your People

It will be natural for your employees to resist change. They have

procedures and processes they're already familiar with.

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Salespeople, especially, tend to have their own individual

systems for doing their jobs, from notebooks to index cards to

PDA's. You need to get buy-in. It's important to consult with

your employees, get their feedback, and constantly show each

of them how they will benefit from the changes. People give up

familiar processes IF they see there's something better ahead.

Training must be accessible and ongoing. The most important time for

training is in the months after deployment.

Set realistic expectations, provide ongoing feedback, announce

milestones, and reward early gains, perhaps with incentives.

The entire organization needs to collaborate as it delivers more

customer value and becomes more customer-centric.

Ensure Quality Data

Apart of your training needs to focus everyone on the need for accurate,complete data. Emphasize to employees that great customer

data is the key to unlocking customer value. Show each person

how they will benefit. Make everyone aware of how marketing

campaigns can be monitored more effectively, more accurate

sales forecasts can come together more quickly, and add-on

sales will be easier.

Set clear standards for data quality. Communicate them widely. Make

someone the champion of clean data. Devise a plan for

checking and maintaining data to ensure it is accurate and

clean.

Engage in Continuous Improvement

You've set up mechanisms for employee, partner and customerfeedback. As you gather that feedback, take part in continuous

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improvement. Refine your strategies and processes, set new

goals, and devise tactics to achieve them. Monitor the entire

system for employee participation and make sure it's getting

accurate and complete data.

You might consider setting up incentive bonuses for people based on

increasing customer satisfaction.

These are some of the most common steps that have resulted in CRM

success and solid ROI. Now take a look at CRM pitfalls to avoid.

CRM FAILURES

Reasons for CRM Failures

CRM Strategy Errors

The right leadership is not in place

A business leader needs to be in charge of the CRM effort, not IT.

Successful CRM is a major business initiative, not a technology

initiative.

CRM Strategy not clear

Your CRM strategy and vision need to define what customers

experience at each touch point, and how will they be handled at

each touch point. The vision needs to be clear to everyone. Amajor pitfall occurs when your business constituents have

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differing expectations of CRM's benefits. Sharing a common

vision is key.

The CRM strategy is different from the business strategy

CRM is sometimes seen as a lower level automation step or patch,

rather than a top level re-thinking of how customers are served.

Your CRM strategy and business strategy need complete

alignment.

Processes not re-designed

CRM is an expensive way to automate inefficient or ineffective

processes.

Companies get better results from CRM when they begin by focusing on

sales processes: how do customers need to be approached,

convinced, served and satisfied? Only when these questions

are answered should steps be taken to plan software or

process changes.

By managing and measuring the sales processes (opportunity

management? and "sales method? In CRM terms) it is possible

to take full advantage of CRM's potential. The steps taken

should include:

Defining and developing new market segments

Increasing the ability to:

Cross-sell

Up-sell

Retain

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Acquire

Reactivate Experience (Enhancement through better customer

interaction strategies)

Customers not consulted

What do your customers think of your company before, during, and after

the CRM implementation? What are they happy with, and what

are their complaints? How are other suppliers serving them in

ways that they like? Too often, surprisingly enough, the "C" in

"CRM" is not consulted in all phases of the initiative.

Unclear metrics

It's critical to review your plan to measure key performance indicators,

and ROI. Can your metrics truly determine the real business

value of your effort? The quality of metrics has been a deciding

factor in making or breaking many CRM projects.

Implementation Errors

Inability to link channels

Have you considered ALL customer touch points and processes? CRM

projects often have focused on some parts of the customer

experience, but ran into trouble when they were unable to link

with or serve well all parts of the customer experience.

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Lack of preparedness for continuous improvement

Be ready for bumps in the road. Be ready to refine strategies, revise

goals, re-set metrics, and learn from feedback. Successful CRM

projects are rarely completely successful from the outset.

People errors

Introducing CRM to hundreds of employees at a time

It's easy to want to do too much, too fast. Get it right first with a small

team of employees chosen to represent a cross-section of your

company. Choose an initial project that can make a dramatic

difference, with clear key performance indicators. Strong pilot

results will help you avoid the next pitfall:

Changing the system, but not the people

It's easy to focus too much on the new technologies and processes

rather than focusing first on the people who will use them

successfully. You need employee excitement about doing a

better job for customers. You need employee feedback and

overall buy-in. The entire company needs to own "customer-

first." They need to see that the CRM vision you all hold takes

them to a better place than where they are now.

Process errors

Instead of enhancing new processes, changing the CRM system to fit

old processes

To avoid the pain of revision, some companies don't take theopportunity to re-engineer and optimize their processes. They

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look to CRM as a patch rather than an opportunity from the

ground up to increase customer satisfaction, revenue, service

and overall productivity.

Technology Errors

Customer data is in more places than expected

As implementation gets underway, key data can turn up in salespeople's

PDA's, spreadsheets, handwritten notes, and legacy systems.

To avoid surprise integration nightmares, the requirements

gathering stage needs to be careful and thorough.

Different CRM solutions are in place but do not work well together.

Often marketing, sales and service departments already have different

types of CRM software, from different vendors, to track the

same customers. As a result, these departments can't share

data, and have redundant support and administration costs.

Customer Management Errors

Customers do not experience new benefits

The ultimate test is to be able to demonstrate increased satisfaction

among customers, along with increased customer value to your

business. This goal can inform every choice you make during

planning and implementation. But just like the adage "watch

the ball" in sports, it's a fundamental often overlooked.

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Your vendor's experience with CRM implementation is one of your best

assets. See a selection of leading vendors.

The Truth about CRM Success & Failure

When Carl Underhill accepted the job as chief information officer of

Pioneer Investments in April 2001, he began his first day

staring failure in the face. The global financial services firm that

hired Underhill built its reputation on making choice

investments--that is how the 74-year-old company grew to

manage $98 billion in assets, employing a 90-person sales

force selling to 40,000 financial advisors. However, even

Pioneer's successes in financial investments could not prepare

the company for what was to come with its CRM investment.

In early 2000 Pioneer decided to proactively manage its client contacts,

sales and marketing information and new-product testing

results by implementing a CRM solution. Pioneer's goal was to

provide rich data about client behavior and competitors to

internal marketing and sales staff, as well as to field sales

teams, via a Web-based solution.

After examining various products, Pioneer bought a full CRM footprint

from E.piphany Inc. The decision was based largely on

E.piphany's strength in Web-based services, which was

important given Pioneer's large field staff. Additionally,

E.piphany wanted to build its financial services clientele, so it

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was amenable to helping Pioneer mold and tailor the product

specifically for its needs.

Pioneer began to implement the E.piphany suite in July 2000, but within

months it became clear that the solution was too big to make

for a successful, timely, on-budget rollout. The plan stalled by

November and sat idle until Underhill's arrival six months later.

With the findings of well-respected research firms, such as Gartner

Inc. and Meta Group Inc., which state that anywhere from 50

percent to 80 percent of CRM implementations fail, many would

likely think Underhill's chances for a successful CRM

implementation were slim. These statistics have thoroughly

scared top-level executives to the point of either abandoning

existing CRM implementations or halting plans to begin one.

However, CRM consultants are more optimistic about CRM

success rates, as they claim inconsistencies exist not in the

analysts' research, but in their definition of failure.

Despite CRM consultants' efforts to allay their customers concerns, the

research firms' statistics quickly spread throughout the

industry. This sent shock waves that are still reverberating

today. "Companies are looking at those numbers and saying,

'never mind' to CRM," says Sue Handman, CRM solutions

director at RCG Information Technology, a consulting firm

based in Edison, N.J.

Barton Goldenberg, president of ISM Inc., a Bethesda, M.D.--based CRM

consultancy, has performed more than 300 CRM

implementations with a success rating of more than 90 percent.

Even so, he is also finding more reluctance toward CRM

implementations from his clients: "I have customers asking me,

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'With the failure rate at 80 percent, why do you think this

project should succeed?'"

While top-level executives are swayed by the broad failure statistics,

confident consultants are not. "I vehemently disagree with the

statistics. Not only are they unfair, but they are doing

unreasonable damage to the CRM industry. These numbers are

damaging top-management perception levels," Goldenberg

says. "I'm not knocking the leading IT analysts. It is their

business to provide general reports of interest to their payingclient-base. What concerns me is the way they measure those

success rates."

Handman concurs: "I agree that the analysts who reported these

statistics believe them, but I don't believe they are right. I

believe that defining failure is the issue."

Explaining the Numbers

Last fall Gartner issued a statement that said, "Through 2006 more than

50 percent of all CRM implementations will be viewed as

failures from a customer's point of view." In this case the

customers are the companies that "are receiving the benefits of

these processes," says Scott Nelson, a vice president and

research director at Gartner.

Despite common misconceptions that 80 percent of all CRM

implementations fail, Nelson says that the 80 percent failure

rating only applies to sales automation implementations. "CRM

should provide salespeople with better pipeline reporting,

rather than only make it easier to sell more. The latest CRM

solutions are forcing salespeople to enter more administrative

numbers than before. As a result firms find they spend millions

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in sales automation only to learn that sales reps are still using

ACT," Nelson says.

Yet, not all components of CRM have such a high failure rate. "It

depends on what subset of CRM you are implementing. Email

response management systems tend not to have that kind of

failure rate. The 50 percent failure rate was across the

spectrum," Nelson says. "We wouldn't label it a failure unless

one aspect was so overwhelming, such as a drop in customer

satisfaction, shopping cart abandonment rates go up, or salesdecrease."

Nelson concedes that measuring CRM failure is often difficult. The most

common problem is many companies implementing CRM "don't

apply good project management skills" and do not set metrics

that can help them define success or failure, Nelson says.

Setting Objectives

This is where consultants find holes in the research firms' assertions.

Without a predefined set of mutually agreed upon metrics for a

CRM implementation, failure cannot be accurately measured,

consultants maintain. Without these metrics failure rates are

subjective, because they are based on what matters most to the

individual people involved and not on a mutually agreed uponset of values.

To prove how the same CRM implementation can be viewed as both a

failure and a success, Goldenberg cites one client that is

implementing a sales and marketing CRM project involving

more than 3,000 people. "When asked if it was successful, the

marketing people said for marketing purposes the global

customer profiles were a raving success. The CIO, however,

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said the CRM project was a dismal failure, because eighty-four

databases were not properly integrated into one holistic data

structure," Goldenberg says.

Nelson acknowledges the subjectivity of Gartner's findings. "There's a

certain element of subjectivity, because there were multiple

analysts participating in different areas, and as a result there

isn't a unified definition of failure. This was not one monolithic

quantitative study. It was pieces of studies put together," he

says.

So the question remains, how does one define failure when

implementing a CRM solution? "The failure rate is driven by not

clearly understanding what you want to accomplish, and then

designing your project to focus on, and deliver, results that are

not aligned with your goals," says Ray Hicks, senior consultant

at Kowal Associates Inc., based in Boston.

According to RCG's Handman, to define failure it is essential to first

define success by outlining expectations before implementing

the CRM solution. "Failure is the inability to meet mutually

defined expectations. A lot of customers haven't set these

expectations. Everyone, including IT, salespeople, customers,

the software vendor, and integrators, has to agree on what the

expectations are, how the project will be implemented, and over

what time frame. And if they can't define the end product they

should define it in pieces," Handman says.

Breaking up the CRM project into smaller, more manageable

components is critical, because business needs change over

time. But not all customers recognize this initially. Goldenberg

recalls one customer, Jim Rubin, CIO of Tripos Inc., a provider

of drug-discovery chemistry, software, and enterprise

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informatics, who initially refused to set a business case with

metrics prior to Tripos' CRM project. "Nearly every company

I've been in is not static. You need a business plan that takes

that into consideration. If we change our business, you can't

track that against your business plan, because you're

comparing apples to oranges," Rubin says. "I pushed back

pretty hard on that. I'm not particularly a fan of a report that sits

on a shelf and doesn't get used."

"He was heading for a shipwreck," Goldenberg says. However,Goldenberg persisted, and with Handman's needs in mind, he

suggested writing a business case with smaller, more

attainable goals over a shorter period of time.

Goldenberg's persistence paid off. "I can't claim that I fully respected

Bart's approach when we retained him; however, [implementing

CRM] in stages and demonstrating the benefits to each stage is

critical to the success," Rubin concedes.

Trying to implement the whole E.piphany suite at once, instead of in

manageable pieces, is what set Pioneer off course, Underhill

asserts. "When I came in, we took a look at the initial plan and

made a 180 degree turn," he says. "Besides being too large, the

major issue was that we couldn't get the [CRM] project map on

a white board and draw a business benefit against every

feature and function the suite offered. It didn't make sense to

implement everything like we had been trying to do."

Creating a Plan for Success

Underhill's plan was to isolate the portions of the E.piphany suite that

could provide true and immediate business benefit and start

with those. "The technology wasn't an issue since E.piphany

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lends itself to scalability. The biggest issue was simply trying

to be all things to all people," he says. "We took a small project

team and spread everyone so thin that no one could rapidly

address changing business needs. Breaking the

implementation into manageable parts solved that." But it was

a task the CIO found easier said than done.

"Rolling out portions of CRM solutions is difficult--they are so integrated

and built around the idea of end-to-end. To cut them up, your

approach has to be careful," Underhill says.

That careful approach began with creating workgroups of sales and

marketing teams, senior management, and the IT staff to hash

out which CRM functions had to be available immediately and

which could wait.

The group first determined sales force analytics was the most

immediate need. The goal was to take contact management in

its purest form and add features of CRM so the field sales staff

could get rich information to aid the sale, with a delivery

method that would replace telephony and hard-wired laptops.

To achieve this Pioneer invested $15,000 in Blackberry pagers last

September and developed software to integrate portions of the

E.piphany sales analytics solution with the pagers. Nowsalespeople can query the system for information about a

client, such as its last big purchase. There is also an alert

system to push to users information that they specify

themselves.

Underhill says that now he is confident that every dollar spent on the

new technology will be earned back. "Even if building a CRM

solution in this manner doesn't allow us to save money, it

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allows us to use our funds efficiently," Underhill says. "We are

doing a smarter campaign that will translate to higher sales

later."

Moving Forward

Despite some of the damage that CRM consultants claim the research

firms' reports may have done to the industry, Gartner's Nelson

argues that the reports have helped the industry. "We have

some people accuse us on the hype cycle that it pushes CRMinto the trough," Nelson says. "However, it makes people

realize CRM has to be viewed as more than just a technology. It

helps firms become more conscious to properly staffing

projects and demanding more rigorous ROI work. It has helped

the market mature." Nelson says that he has seen this

firsthand: Clients are more informed about CRM and are

asking him better questions.

Pioneer and Tripos are prime examples of how organizations are getting

smarter about implementing CRM, and more success stories

like theirs are cropping up. In fact, analysts at the Aberdeen

Group Inc. are determined to point that out in a report called,

"What Works: Ten Successful Implementations in

CRM/Customer Contact Centers," which is slated for release

this summer.

"We expect to find that CRM really works," says Christopher Fletcher,

vice president and research director at Aberdeen Group. "This

is partly in response to the horror stories about the CRM failure

rate. We believe there are a lot of positive benefits that come

out of CRM implementations, both qualitative and quantitative."

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Cross-channel integration trulyInsulates the customer from internal machinations

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Trends in CRM:

Increasingly, enterprises must create tighter collaborative

linkages with partners, suppliers, and customers, squeezing

out time and costs while enhancing the customer experience

and the total value proposition [22].

Figure 8.4 outlines four types or categories of CRM that are being

implemented by many companies today and summarizes their

benefits to a business. These categories may also be viewed as

stages or trends in how many companies implement CRM

applications, and the figure also outlines some of the

capabilities of CRM software products. Most businesses start

out with operational CRM systems such as sales force

automation and customer service centers. Then analytical CRM

applications are implemented using several analytical

marketing tools, such as data mining, to extract vital data about

customers and prospects for targeted marketing campaigns.

Increasingly, businesses are moving to collaborative CRM systems, to

involve business partners as well as customers in collaborative

customer services. This includes systems for customer self-service and feedback, as well as partner relationship

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management (PRM) systems. PRM applications apply many of

the same tools used in CRM systems to enhance collaboration

between a company and its business partners, such as

distributors and dealers, to better coordinate and optimize

sales and service to customers across all marketing channels.

Finally, many businesses are building Internet, intranet, and

extranet Web-based CRM portals as a common gateway for

various levels of access to all customer information, as well as

operational, analytical, and cooperative CRNI tools for

customers, employees, and business partners [3, 9]. Lets look

at a real world example.

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Section IIEnterprise Resource

Planning:

Introduction

What do Microsoft, Coca-Cola, Cisco, Eli Lilly, Alcoa, and Nokia

have in common? Unlike most businesses, which operate on

25-year-old back-office systems, these market leaders

reengineered their businesses to run at breakneck speed by

implementing a transactional backbone called enterprise

resource planning (ERP). These companies credit their ER?

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Systems with having helped them reduce inventories, shorten

cycle times, lower costs, and improve overall operations [9].

Businesses of all kinds have now implemented enterprise

resource planning (ERP) systems. ERP serves as a cross-

functional enterprise backbone that integrates and automates

many internal business processes and information systems

within the manufacturing, logistics, distribution, accounting,

finance, and human resource functions of a company. Large

companies throughout the world began installing ERP systemsin the 1 990s as a conceptual framework and catalyst for

reengineering their business processes. ERP also served as

the vital software engine needed to integrate and accomplish

the cross-functional processes that resulted. Now, ERP is

recognized as a necessary ingredient that many companies

need in order to gain the efficiency, agility and responsiveness

required to succeed in todays dynamic business environment.

Read the Real World Case on the next page. We can learn a lot

about the major challenges businesses face when

implementing ER]? Systems.

What is ERP?

ER? is the technological backbone of e-business, an enterprise

wide transaction framework with links into sales order

processing, inventory management and control production and

distribution planning, and finance [91.

Enterprise resource planning is a cross-functional enterprise

system driven by an integrated suite of software modules that

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supports the basic internal business processes of a company.

For example, ERP forward for a manufacturing company will

typically process the data from and track the status of sales,

inventory, shipping, aid invoicing, as well as forecast raw

material and human resource requirements. Figure 8.6 presents

the major application) components of an ER]? System. Figure

8.7 illustrates some of the key cross-functional business

processes and supplier and customer information flows

supported by ERP systems.

ERP gives a company an integrated real-time view of its core

business processes, such as production, order processing, and

inventory management, tied together by the ERP application

software and a common database maintained by a database

management system. ERP systems track business resources

(such as cash, raw materials, and production capacity), and the

status of commitments made by the business (such ascustomer orders, purchase orders, and employee payroll), no

matter which department (manufacturing, purchasing sales,

accounting, etc.) has entered the data into the system [22].

ERP software suites typically consist of integrated modules of

manufacturing, distribution, sales, accounting, and human

resource applications. Examples of manufacturing processes

supported are material requirements planning, production

planning, and capacity planning. Some of the sales and

marketing processes supported by ERP are sales analysis,

sales planning, and pricing analysis, while typical distribution

applications include order management, purchasing, and

logistics planning. ER]? Systems support many vital human

resource processes, from personnel requirements planning to

salary and benefits administration, and accomplish most

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required financial record-keeping and managerial accounting

applications. Figure 8.7 illustrates the processes supported by

the ERP system installed by the Colgate-Palmolive Company.

Lets take a closer look at their experience with ERP.

Benefits and Challenges of ERP:

As the example of Colgate-Palmolive has just shown, ERP

systems can generate significant business benefits for a

company. Many other companies have found major business

value in their use of ERP in several basic ways [16].

Quality & Efficiency- ERP creates a framework for integrating and

improving a companys internal business processes those

results in significant improvements in the quality and efficiency

of customer service, production, and distribution.

Decreased Costs- Many companies report significant reductions in

transaction processing costs and hardware, software, and it

support staff compared to the nonintegrated legacy systems

that were replaced by their new ERP systems.

Decision support- ERP provides vital cross-functional information on

business performance quickly to managers to significantly

improve their ability to make better decisions in a timely

manner across the entire business enterprise.

Enterprise Agility Implementing ERP systems breaks down many former

departmental and functional walls or silos of business

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processes, information systems, and information resources.

This results in more flexible organizational structures,

managerial responsibilities, and work roles, and therefore a

more agile and adaptive organization and workforce that can

more easily capitalize on new business opportunities.

The Costs of EPR:

An ERP implementation is like the corporate equivalent of a brain

transplant. We pulled the plug on every company application

and moved to PeopleSoft software. The risk was certainly

disruption of business, because f you do not do ERP properly,

you can kill your company, guaranteed [9].

So says Jim Prevo, ClO of Green Mountain Coffee of Vermont,

commenting on their successful implementation of an ERP

system. Though the benefits of ERP are many, the costs and

risks are also considerable, as we will continue to see in some

of the real world cases and examples in the text. Figure 8.8

illustrates the relative size and types of costs of implementing

an ERP system in a company. Notice that hardware and

software costs are a small part of total costs, and that the costs

of developing new business processes (reengineering) and

preparing employees for the new system (training and change

management) make up the bulk of implementing a new ERP

system. Converting data from previous legacy systems to the

new cross-functional ERP system is another major category of

ERP implementation costs [14].

The costs and risks of failure in implementing a new ERP system

are substantial. Most companies have had successful ERP

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implementations, but a sizable minority of firms experienced

spectacular and costly failures that heavily damaged their

overall business. Big losses in revenue, profits, and market

share resulted when core business processes and information

systems failed, or did not work properly. In many cases, orders

and shipments were lost, inventory changes were not recorded.

Causes of EPR Failures:

What have been the major causes of failure in ERP projects? In

almost every case, the business managers and IT professionals

of these companies underestimated the complexity of the

planning, development, and training that were needed to

prepare for a new ERP system that would radically change their

business processes and /information systems. Failure to

involve affected employees in the planning and development

phases and to change management programs, or trying to do

too much too fast in the conversion process, were typical

causes of failed ERP projects. Insufficient training in the new

work tasks required by the ERP system, and failure to do

enough data conversion and testing, were other causes of

failure. In many cases, ERP failures were also due to over

reliance by company or IT management on the claims

Figure 8.7: The business processes and functions supported by the ERP

system implemented by the Colgate-Palmolive Company.

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Typical costs of implementing a new ERP system of ERP softwarevendors or on the assistance of prestigious consulting fins

hired to lead the implementation

[12]. the following experiences of companies that did it right give us a

helpful look at what is needed for a successful ERP

implementation.

Trends in ERP:

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Today, ERF is still evolving-adapting to developments in technology and

the demands of the market. Four important trends are shaping

ERPs continuing evolution: improvements in integration and

flexibility, extensions to e-business applications, a broader

reach to new users, and the adoption of Internet technologies

[9}.

Figure 8.9 illustrates four major developments and trends that are

evolving in ERP applications [9, 13]. First, the ERP software

packages that were the mainstay of ERP implementations in the

1990s, and were often criticized for their inflexibility; have

gradually been modified into more flexible products.

Companies who installed ERP systems pressured software

vendors to adopt more open, flexible, standards-based

software architectures. This makes the software easier tointegrate with other application programs of business users, as

well as making it easer to make minor modifications to suit a

companys business processes. An example is SAP R13

Enterprise, released in 2002 by SAP AG as a successor to

earlier versions of SAP R3. Other leading ERP vendors,

including Oracle, People- Soft, and J. D. Edwards, have also

developed more flexible ERP products.

Web-enabling ERP software is a second development in the

evolution of ERE The growth of the Internet and corporate

intranets and extranets prompted software companies to use

Internet technologies to build Web interfaces and networking

capabilities into ERP systems. These features make ER]?

Systems easier to use and connect to other internal

applications as well as to the systems of a companys business

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partners. This Internet connectivity has led to the development

of interenterprise ER]? Systems that provide Web-enabled links

between key business systems (such as inventory and

production) of a company and its customers, suppliers,

distributors, and others. These external links signaled a move

toward the integration of internal-facing ERP applications with

the external-focused applications of supply chain management

(SCM) and a companys supply chain partners. We will discuss

supply chain management in Section-III

All of these developments have provided the business and

technological momentum for the integration of ERP functions

into e-business suites. The major ERP software companies

have developed modular, Web-enabled software suites that

integrate ERP customer relationship management, supply chain

management, procurement, decision support, enterprise

portals, and other business applications and functions.Examples include Oracles e-Business Suite and SAPs my

SAP. Some e-business suites disassemble ERP components

and integrate them into other modules, while other products

keep ERP as a distinct module in the software suite. Of course,

the goal of these software suites is to enable companies to run

most of their business processes using one Web-enabled

system of integrated software and databases, instead of a

variety of separate e-business applications. See Figure 8.10.

Lets look at a real world example.

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SECTION-3

Electronic COMMERCE:

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Introduction to e-commerce:

E-commerce is changing the shape of competition, the speed of

action, and the streamlining of interactions, products, and

payments from customers to companies and from companies

to suppliers [131.

For most companies today, electronic commerce is more than just

buying and selling products online Instead, it encompasses the

entire online process of developing, marketing, selling,

delivering, servicing, and paying for products and services

transacted on internet worked, global marketplaces of

customers, with the support of a worldwide network of

business partners. As we will see in this chapter, electronic

commerce systems rely on the resources of the Internet and

many other information technologies to support every step of

this process. We will also see that many companies, large andsmall, are engaged in some form of e-combiners activities.

Therefore, developing an e-commerce capability has become

an important option that hold be considered by most

businesses today.

Read the Real World Case on the next page. We can learn a lot

about the challenges and opportunities in the field of electronic

commerce from this example.

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E-commerce involves accomplishing a range of business processes to

support the electronic buying and selling of goods and

services.

The scope of e- Commerce:

Figure 9.2 illustrates the range of business processes involved in

the marketing, buying, selling, and servicing of products and

services in companies that engage in e-commerce [7].Companies involved in e-commerce as either buyers or sellers

rely on Internet-based technologies and e-commerce

applications and services to accomplish marketing, discovery,

transaction processing, and product and customer service

processes. For example, electronic commerce can include

interactive marketing, ordering, payment, and customer

support processes at c-commerce catalog and auction sites on

the World Wide Web. But c-commerce also includes c-business

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processes such as extranet access of inventory databases by

customers and suppliers (transaction processing), intranet

access of customer relationship management systems by sales

and customer service reps (service and support), and customer

collaboration in product development via e-mail exchanges and

Internet news- groups (marketing/discovery).

E- Commerce Technologies:

What technologies are necessary for electronic commerce? The

short answer is that most information technologies and Internet

technologies that we discuss in s text are involved in electronic

commerce systems. A more specific answer is illustrated in

Figure 9.3, which is an example of the technology resources

required by many c-commerce systems. The figure illustrates

some of the hardware, software, data, and network components

used by Free Markets Inc. to provide B2B online auction c-

commerce services [5].

Categories of E-commerce:

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Many companies today are participating in or sponsoring three

basic categories of electronic commerce applications:

business-to-consumer, business to-business, and consumer-

to-consumer e-commerce. Note: We will not .explicitly cover

business-to government (B2G) and e-government applications

in this text. However, many c-commerce concepts apply to

such applications.

Business-to-Consumer (B2C) c-Commerce

In this form of electronic commerce, businesses must develop

attractive electronic marketplaces to sell products and services

to consumers. For example, many companies offer c-commerce

websites that provide virtual storefronts and multimedia

catalogs, interactive order processing, secure electronic

payment systems, and online customer support.

Business-to-Business (B2B) e-Commerce

This category of electronic commerce involves both electronic

business marketplaces and direct market links between

businesses. For example, many companies offer secure

Internet or extranet c-commerce catalog websites for their

business customers and The hardware software, network, and

database components and IT architecture of B2B online

auctions provider Free markets Inc. are illustrated in this

Internet based Quick Source auction Service suppliers. Also

very important are B2B e-commerce portals that provide

auction and exchange marketplaces for businesses. Others

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Fir B2C, C2B (consumer-to-business), or B2B e-commerce

Electronic personal advertising of products or services to buy or sell by

consumers at electronic newspaper sites, consumer e-

commerce portals, or personal websites is also an importantform of C2C e-commerce.

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Essential e-commerce Processes:

The essential e-commerce processes required for the successful

operation and management of e-connect activities are

illustrated in Figure 9.4. This figure outlines the nine key

components of an e-commerce process architect-ore that is the

foundation of the e-commerce initiatives of many companies

today [11]. We will concentrate on the role these processes

play in e-commerce systems, but you should recognize that

many of these components may also be used in internal,

noncommercial-e-business applications. An example would be

an intranet-based human resource system used by a

companys employees, which might use all but the catalogmanagement and product payment processes shown in Figure

9.4. Lets take a brief look at each essential process category.

Access Control and Security:

E-cornered processes must establish mutual trust and secure

access between the parties in an e-cornered transaction by

authenticating users, authorizing access, and enforcing

security features. For example, these processes establish that

a customer and e-commerce site are who they say they are

through user names and passwords, encryption keys, or digital

certificates and signatures. The e-commerce site must then

authorize access to only those parts of the site that an

individual user needs to accomplish his or her particular

transactions. Thus, you usually will be given access to all

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resources of an e-commerce Site except for other peoples

accounts, restricted company data, and webmaster

administration areas. Companies engaged in

This e-commerce process architecture highlights nine essential

categories of e-commerce

B2B e-commerce may rely on secure industry exchanges for procuring

goods and services, or Web trading portals that allow only

registered customers access to trading information and

applications. Other security processes protect the resources of

c-commerce sites from threats such as hacker attacks, theft of

passwords or credit card numbers, and system failures. We

discuss many of these security threats and features.

Profiling and Personalizing:

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Once you have gained access to an e-commerce site, profiling

processes can occur that gather data on you and your website

behavior and choices, and build electronic profiles of your

characteristics and preferences. User profiles are developed

using profiling tools such as user registration, cookie files,

website behavior tracking software, and user feedback. These

profiles are then used to recognize you as an individual user

and provide you with a personalized view of the contents of the

site, as well as product recommendations and personalized

Web advertising as part of a one-to-one marketing strategy

Profiling processes are also used to help authenticate your

identity for account management and payment purposes, and

to gather data for customer relationship management,

marketing planning, and website management. Some of the

ethical issues in user profiling are discussed in Chapter 13. See

Figure 9.5.

Documents

Hasrat M.B.A