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e-Business Systems

Chapter 7

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Learning Objectives

Identify these cross-functional enterprise systems, and give examples of how they can provide business value to a company– Resource planning

– Customer Relationship Management

– Supply chain management

– Enterprise application integration

– Transaction processing systems

– Enterprise collaboration systems

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Learning Objectives

Give examples of how the Internet and other information technologies support business processes within the business functions of– Accounting

– Finance

– Human resource management

– Marketing

– Production

– Operations management

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Learning Objectives

Understand the need for enterprise application integration to improve the support of business interactions across multiple e-business applications

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Enterprise Business Systems

E-businessUsing the Internet, other networks,

and IT to support…

Electronic commerce

Enterprise communicationsand collaboration

Web-enabled business processes

E-commerce Buying, selling, and marketing of products, services, and information over the Internet and other networks

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Case 1: NetSuite, Berlin Packaging, Churchill Downs…

CRM software helps sales and marketing professionals increase sales revenue by providing more and better services to customers and prospects

CRM implementation– Often fails due to difficulty of migrating data

– Is easier to do early in a company’s history

Companies must ensure data are in order before launching any major CRM initiative

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Case Study Questions

What are the business benefits of CRM implementations for organizations such as Berlin Packaging and Churchill Downs? – What other uses of CRM would you

recommend to the latter?

Do you agree that smaller organizations are better positioned to be more effective users of CRM than larger ones?

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One of the main issues in the case is the importance of “good” data to the success of CRM implementations

– In Chapter 5, we compared the file processing and database management approaches to data resource management

Which of the problems discussed theredo you see in this case?

How do CRM applications attempt to address them?

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Cross-Functional Systems

Cross-functional systems cross the boundaries of traditional business functions

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Enterprise Application Architecture

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Managing at the Enterprise Level

Getting the whole business to fly in the same direction, as efficiently as possible

– Customer relationships– Back-office operations– Movement of raw materials & finished goods

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Customer Relationship Management

A customer-centric focus– Customer relationships are a company’s

most valued asset– Every company should find and retain the

most profitable customers possible

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What is CRM?

Managing the full range of the customer relationship involves two related objectives

Managing the full range of the customer relationship involves two related objectives

(2) Providing the customer with a single, complete view of the company and

its extended channels

(1) Providing customer-facing employees with a single, complete view of every customer,at every touch point, across all channels

CRM uses IT to create a cross functional enterprise system that integrates and automates 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 customer business & life-cycle events

Data are captured through 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 sales activities– Optimize cross- and up-selling

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

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Marketing and Fulfillment

CRM systems help with direct marketingcampaigns by automating tasks

Qualifying leads for targeted marketing

Scheduling and tracking mailings

Capturing and managing responses

Analyzing the business value of a campaign

Fulfilling responses & requests

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Customer Service and Support

CRM helps customer service managers create, assign and manage customers’ requests for service– Call center software– Help desk software– Web-based self-service

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Retention and Loyalty Programs

Boosting customer

retention 5% can boost

profits 85%

It costs 6 times more to sell to

a new customer

An unhappy customer will

tell 8-10 others

The odds of selling to an

existing customer are 50%; a new

one 15%

70% of complaining customers will do business with the

company again if it quickly fixes a

problem

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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

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Three Phases of CRM

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Benefits and Challenges of CRM

Real-time customization and personalization of products and services

Track when and how a customer contacts the company

Identify and target the best customers

Provide a consistent customer experience

Provide superior service and supportacross all customer contact points

Benefits of CRM

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CRM Failures

Business benefits of CRM are not guaranteed– 50% of CRM projects did not produce

promised results– 20% damaged customer relationships

Reasons for failure– Lack of understanding and preparation– Not solving business process problems first– No participation on part of involved business

stakeholders

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What is ERP?

Facilitates business,supplier, and customer

information flows

Facilitates business,supplier, and customer

information flows

Supports basicinternal business

processes

Supports basicinternal business

processes

An integratedsuite of software

modules

An integratedsuite of software

modules

The backbone ofbusiness processesThe backbone of

business processes

A cross-functionalenterprise systemA cross-functionalenterprise system

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ERP Application Components

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Benefits and Challenges of ERP

ERP Business Benefits

1. Quality & efficiency

2. Decreased costs

3. Decision support

4. Enterprise agility

ERPCosts

1. High risk & cost

2. Hardware and software are a small part of overall project

3. 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

Common Causes of ERP Failure

Over-reliance on ERP vendor or consultants

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

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Supply Chain Management (SCM)

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

Forecast demand

Enhance relationshipswith customers,

suppliers, distributors,and others

Receive feedback onthe status of everylink in the supply

Control inventory

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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

The electronic exchange of business transaction documents between supply chain trading partners

One of the earliest uses of information technologyfor supply chain management

Many transactions occur over the Internet,using secure virtual private networks

The almost complete automation of ane-commerce supply chain process

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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

Supply chain design

Collaborative demand & supply planning

Planning

Materials management

Collaborative manufacturing

Collaborative fulfillment

Execution

Supply chain event management

Supply chain performance management

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Benefits and Challenges of SCM

Key Benefits

Faster, moreaccurate order

processing

Strategicrelationshipswith supplier

Lowertransaction andmaterials cost

Quicker timesto market

Reductions ininventory levels

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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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Enterprise Application Integration

EAI software connects cross-functional systems Serves as middleware to provide

– Data conversion– Communication between systems– Access to system interfaces

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How EAI Works

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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

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Transaction Processing Systems

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The Transaction Processing Cycle

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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

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ECS Tools

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Functional Business Systems

Various types of information systems that support the business functions of…

Accounting

Finance

Marketing

Operations management

Human resource management

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Case 2: OHSU, Sony, Novartis, and Others

Oregon Health & Science University uses Oracle’s iRecruitment application, which is part of its E-Business HR Management System suite

– Managers can request a new employee and process applications electronically

– Handles most administrative work, including routing forms and posting jobs on the Web site

– The university fills job openings two weeks fasterand saves $1,500 per job

More and more HR is being called to be a strategic business partner, and professionals in this area are turning to IT for innovative solutions

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What are some of the business benefits of the technologies described in the case? – Provide examples beyond the automation

of transaction-oriented processes

Do you think the business value of these strategic HRM applications depends on the type of business a company is in?– For instance, consulting, manufacturing,

or professional services?

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What are some of the challenges and obstacles in developing and implementing HRM systems?

– Are these unique to this type of system?

– What strategies would you recommend for companies to meet those challenges?

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IT in Business

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Marketing Systems

Marketing systems are concerned with…

Planning, promotion, and sale of

existing products in

existing markets

Planning, promotion, and sale of

existing products in

existing markets

Development of new

products and new markets

Development of new

products and new markets

Better attracting and

serving present and

potential customers

Better attracting and

serving present and

potential customers

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Marketing Information Systems

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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

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Targeted Marketing

Advertising and promotion managementconcept with five targeting components

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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

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Manufacturing Information Systems

Supports production/operations functions– All activities concerned with planning and

control of the processes tied to producing goods or services

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Computer-Integrated Manufacturing

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CIM Objectives

Simplify… production processes, product designs, and factory organization

Automate… production processes and the business functions that support them

Integrate… all production and support processes using– Networks– Cross-functional business software– Other information technologies

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CIM Objectives

CIM supports the concepts of…

Agilemanufacturing

Total qualitymanagement

(TQM)

Flexiblemanufacturing

systems

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Manufacturing Information Systems

Computers help engineers design products– Computer-aided engineering (CAE)

– Computer-aided design (CAD)

– Computer-aided manufacturing (CAM)

Manufacturing also uses software– Computer-aided process planning

– Material requirements planning (MRP)

– Manufacturing resource planning

– Manufacturing execution systems (MES)

– Process and machine control

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Human Resource Management (HRM)

Information systems support– Planning to meet personnel needs

– Development of employees to their full potential

– Control of all personnel policies and programs

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HRM Systems

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HRM and the Internet

Recruitment viathe company website

& commercialrecruiting services

Posting messagesin selected Internet

newsgroups

Communicating withjob applicants

via e-mail

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HRM and Corporate Intranets

Corporate intranet uses

Disseminate information faster

than previous company channels

Disseminate information faster

than previous company channels

Process common HRM

transactions

Process common HRM

transactionsAround-the-clock

HRM services

Around-the-clock HRM services

TrainingTrainingCollect

information from employees online

Collect information from

employees online

Allow HRM tasks to be performed with little HRM

dept. intervention

Allow HRM tasks to be performed with little HRM

dept. intervention

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Employee Self-Service

Intranet applications can allow employees to

View benefits

Enter travel and expense reports

Verify employment and salary information

Access and update personal information

Enter time-sensitive data

Receive training

Produce automated pay sheets

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Accounting Information Systems

Oldest and most widely used

information system in business

Records and reports business transactions and economic events

Produces financial statements

Forecasts future conditions

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Accounting Information Systems

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Financial Management Systems

Supports business managers and professionals making decisions concerning– Financing of a business

– Allocation and control of financial resources within a business

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Financial Management Systems

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Case 3: Perdue Farms and Others

Even the best companies are challenged by supply chain pressures during holidays

The holiday season is difficult for manufacturers and retailers because they’re making educated guesses and bets on what demand is going to be– They’re not going to get it right every time

Delivering the right number of products to the right customers at the right time is very important – Businesses are turning to forecasting and supply

chain management tools

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What key factors determine the success or failure of supply chains during the holiday season?

– Which of these are, or could be, under the control of companies, and which are inherent in the end-consumer business?

Consider the increasing use of gift cards in lieu of gifts during the holiday season

– What effects does this new practice introduce into demand planning and supply chain management?

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Consider that virtually nothing is known about the recipients of gift cards – What strategies can retailers and their suppliers

consider to accommodate these effects?

Prof. Brian Tomlin says that smart companies substitute information for inventory – What do you think he means by this?

– How do you think companies can take advantage of more extensive and accurate information to improve their inventory and logistic practices?