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Chapter

8
Enterprise Business Systems

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Learning Objectives 1. Identify and give examples to illustrate the following aspects of customer relationship management, enterprise resource management, and supply chain management systems:
Business processes supported Customer and business value provided Potential challenges and trends
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Why Study Customer Relationship Management?

It is easier than ever for customers to comparison shop and, with a click of the mouse, to switch companies. As a result, customer relationships have become a companys most valued asset.

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Customer Relationship Management (CRM) Definition: The use of information technology to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a companys customers

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CRM Application Clusters

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CRM Application Components

Contact and Account Management 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 Sales provides sales reps with tools and company data sources needed to support and manage sales activities, and optimize crossselling and up-selling
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CRM Application Components

Marketing Fulfillment help marketing professionals accomplish direct marketing campaigns by automating such tasks as qualifying leads for targeted marketing, and scheduling and tracking direct marketing mailings Customer Service and Support provides service reps with software tools and real-time access to the common customer database shared by sales and marketing professionals
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CRM Application Components Retention and Loyalty Programs help a company identify, reward, and market to their most loyal and profitable customers

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Three Phases of CRM

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Three Phases of CRM

Acquire new customers by doing a superior job of contact management, sales prospecting, selling, direct marketing, and fulfillment Enhance relationship with customer by supporting superior service from a responsive networked team of sales and service specialists and business partners

Retain and expand business with customers by proactively identifying and rewarding the most loyal and profitable customers
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Benefits of CRM CRM allows a business to identify and target their best customers so they can be retained as lifelong customers for greater and more profitable services. CRM makes possible real-time customization and personalization of products and services based on customer wants, needs, buying habits, and life cycles.
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Benefits of CRM CRM can keep track of when a customer contacts the company, regardless of the contact point.

CRM systems can enable a company to provide a consistent customer experience and superior service and support across all the contact points a customer chooses.

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CRM Failures Lack of understanding and preparation Rely on CRM to solve business problem without first developing the business process changes and change management programs that are required CRM projects implemented without the participation of the business stakeholders involved
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Trends in CRM Operational Analytical

Collaborative Portal-based

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Operational CRM Supports customer interaction with greater convenience through a variety of channels.

Synchronizes customer interactions consistently across all channels Makes your company easier to do business with
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Analytical CRM
Extracts in-depth customer history, preferences, and profitability information from your data warehouse and other databases Allows you to analyze, predict, and derive customer value and behavior and forecast demand

Lets you approach your customers with relevant information and offers that are tailored to their needs
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Collaborative CRM Enables easy collaboration with customers, suppliers, and partners Improves efficiency and integration throughout the supply chain Allows greater responsiveness to customer needs through sourcing of products and services outside of your enterprise
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Portal-based CRM
Provides all users with the tools and information that fit their individual roles and preferences Empowers all employees to respond to customer demands more quickly and become truly customer-focused Provides the capability to instantly access, link, and use all internal and external customer information
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Partner Relationship Management (PRM) Definition: Applications that 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

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Case #2: Challenges of Implementing ERP Enterprise resource planning (ERP) implementations are a lot more than software packages. They are a fundamental transformation of a companys business processes. People, processes, policies, the companys culture are all factors that should be taken into consideration when implementing a major enterprise system.
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Case #2: Challenges of Implementing ERP Reasons for ERP Failures: Managements inability to spec out their own requirements

Implementers inability to implement specs

Undertake too much too quickly

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Case #2: Challenges of Implementing ERP 1. What are the main reasons companies experience failures in implementing ERP systems?

2. What are several key things companies should do to avoid ERP systems failures? Explain the reasons for your proposals.

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Case #2: Challenges of Implementing ERP 3. Why do you think ERP systems in particular are often cited as examples of failures in IT systems development, implementation, or management?

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Enterprise Resource Planning (ERP) Definition: A cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company

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ERP Application Components

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ERP Process & Information Flows

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ERP Benefits Quality and Efficiency ERP creates a framework for integrating and improving a companys internal business processes that results in significant improvements in the quality and efficiency of customer service, production, and distribution

Decreased Costs Significant reductions in transaction processing costs and hardware, software, and IT support staff
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ERP Benefits Decision Support Provides vital crossfunctional information on business performance quickly to managers to significantly improve their ability to make better decisions in a timely manner Enterprise Agility ERP breaks down many former departmental and functional walls of business processes, information systems, and information resources
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Costs of ERP

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Causes of ERP Failures

Business mangers and IT professionals underestimate the complexity of the planning, development, and training needed Failure to involve affected employees in the planning and development phases Trying to do too much too fast in the conversion process Failure to do enough data conversion and testing
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Trends in ERP

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Case #3: Business Value of SCM Benefits of SCM: Reduces production and distribution costs Improves timeliness of shipments Reduces manufacturer inventory levels

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Case #3: Business Value of SCM Challenges of SCM: Acquisition of secure extranet Change company structure Resistance from employees wedded to traditional processes

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Case #3: Business Value of SCM 1. How could moving business information systems with suppliers and distributors to the Web result in such dramatic business benefits as experienced by TaylorMade Golf? 2. How does HON Industries new SCM system improve the efficiency of their supply chain?
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Case #3: Business Value of SCM

3. What other SCM initiatives would you recommend that TaylorMade Golf or HON Industries implement to improve their supply chain performance and business value? Explain the business value of your proposals. 4. What are several ways a small business could use supply chain management to improve the efficiency and business value of its supply chain? Give several examples to illustrate your answer.
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Supply Chain Management (SCM) Definition: A cross-functional interenterprise system that uses information technology to help support and manage the links between some of a companys key business processes and those of its suppliers, customers, and business partners

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SCM Life Cycle

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Electronic Data Interchange (EDI)

Definition: Involves the electronic exchange of business transaction documents over the Internet and other networks between supply chain trading partners

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EDI Activities

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Role of SCM

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SCM Planning Functions Supply Chain Design optimize network of suppliers, plants, and distribution centers

Collaborative Demand and Supply Planning develop an accurate forecast of customer demand by sharing demand and supply forecasts instantaneously across multiple tiers
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SCM Execution Functions

Materials Management share accurate inventory and procurement order information, ensure materials required for production are available in the right place at the right time, and reduce raw material spending, procurement costs, safety stocks, and raw material and finished goods inventory

Collaborative Manufacturing optimize plans and schedules while considering resource, material, and dependency constraints
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SCM Execution Functions

Collaborative Fulfillment commit to delivery dates in real time, fulfill orders from all channels on time with order management, transportation planning, and vehicle scheduling, and support the entire logistics process, including picking, packing, shipping, and delivery in foreign countries Supply Chain Event Management monitor every stage of the supply chain process, from price quotation to the moment the customer receives the product, and receive alerts when problems arise
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SCM Execution Functions Supply Chain Performance Management report key measurements in the supply chain, such as filling rates, order cycle times, and capacity utilization

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SCM Objectives

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SCM Benefits Faster, more accurate order processing Reductions in inventory levels

Quicker times to market

Lower transaction and material costs Strategic relationship with suppliers
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Causes of SCM Failures

Lack of proper demand planning knowledge, tools and guidelines Inaccurate or overoptimistic demand forecasts Inaccurate production, inventory and other business data provided by a companys other information systems Lack of adequate collaboration among marketing, production, and inventory management departments within a company Immature, incomplete or hard to implement SCM software tools
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Trends in SCM

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Case #4: Benefits & Challenges of SCM

Benefits of SCM: Materials prices reduced Fewer employees needed to manage supply chain Order fulfillment time reduced Increased sales by reducing inventory shortages Enables new business partnerships
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Case #4: Benefits & Challenges of SCM Supplier reluctance: Cost of hardware and software Software can be confusing, contradictory and not sculpted to their needs Impenetrable technical jargon

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Case #4: Benefits & Challenges of SCM 1. Why can both large and small businesses cut costs and increase revenues by moving their supply chains online? Use the companies in this case as examples. 2. What is the business value to Eastman Chemical and W. W. Grainger of their initiatives to help their suppliers and customers do business online?
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Case #4: Benefits & Challenges of SCM 3. Why are many small suppliers reluctant to do business online with their large customers? What can be done to encourage small suppliers online?

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Summary Customer relationship management is a cross-functional enterprise system that integrates and automates many of the customer-serving processes in sales, marketing, and customer services that interact with a companys customers.

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Summary Enterprise resource planning is a crossfunctional enterprise system that integrates and automates many of the internal business processes of a company, particularly those within the manufacturing, logistics, distribution, accounting, finance, and human resource functions of the business.

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Summary Supply chain management is a crossfunctional inter-enterprise system that integrates and automates the network of business processes and relationships between a company and its suppliers, customers, distributors, and other business partners.

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Chapter

8
End of Chapter

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