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Challenges
Business
Applications
Module
III
Development
Processes
Information
Technologies
Foundation
Concepts
Chapter 6
Ap p l i c a t i o n s i n B u s i n e s s a n d M a n a g e m e n t
E n t e r p ri s e e - B u s i n e s s S y s t e m s
Chapter Highlights
Section I
Customer-Relationship Management:
The Business Focus
Introduction
Real World Case: Canada Post, Foster Parents Plan, and
Ernex Marketing Technologies, Inc.: CRM Implementation
What Is CRM?
The Three Phases of CRM
Benets and Challenges of CRM
Trends in CRM
Section II
Enterprise Resource Planning:
The Business Backbone
Introduction
Real World Case: Indigo Books & Music Inc.: Selecting
and Implementing an ERP System
What Is ERP?
Benets and Challenges of ERP
Trends in ERP
Section III
Supply Chain Management:
The Business Network
Introduction
Real World Case: Wal-Mart and Mattel: Supply Chain
Management Best Practices
What Is SCM?
The Role of SCM
Benets and Challenges of SCM
Trends in SCM
Real World Case: Call Centres: CRM Challenges
174
Section I
Introduction
Analyzing Canada
Post, Foster Parents
Plan, and Ernex
Marketing
Technologies
Multicultural
Aspects of CRM
Read the Real World Case on Canada Post, Foster Parents Plan, and Ernex Marketing Technologies on the next page. We can learn a lot from these organizations
realization that implementing a CRM solution is tough goingrequiring serious
commitment and major organizational change. However, for companies willing to
make that investment, the results are paying off.
Canada has two ofcial languages in which CRM must be conducted, and even
in the United States, statistics show a growing cultural diversity. According to the
U.S. Census Bureau, there are more than 2.4 million Chinese-speakers in
the United States, and four out of ve of them prefer to speak Chinese at home.
The number of Korean and Vietnamese speakers is also on the rise.
David Graddol, president of The English Company (UK) Ltd. consultancy in
Milton Keynes, England, has spent years studying the ways in which languages
spread. He says many companies pin all of their hopes on English, creating a culture of isolation that ignores the real problems of managing multilingualism.
Barry McGoldrick of electronics component manufacturer Molex Inc. is
familiar with the challenges. Molex is headquartered in Chicago and has ofces
in Toronto, but it is organized into four regions: the Americas, Europe, Far East
North (Japan and Korea), and Far East South, which is the rest of Asia. The
company began a CRM strategy several years ago using an SAP solution to assist
with procurement, customer care, logistics, and marketing fullment. Although
Molex has workers scattered around the globe, McGoldrick says the tools for
tracking sales opportunities are offered in only two languages: Japanese and
English. The lack of translation capabilities limits the extent to which Molex
employees globally can share information: If youve got a guy in Japan and hes
entering a [sales] opportunity and hes entering the text all in Japanese, its not
much use to anyone outside of Japan.
Gary Moore, vice-president of global business development for mySAP CRM
at SAP AG, says its software supports several languages, and more will likely
follow. Its just a question of managing the workload and the cycle with the
resources that you have, he says [22].
Re a l W o r l d C a s e 1
Ca nada Post, Foster Parents Pla n, a nd Ernex
Market i ng Technologie s:
CRM Implementat ion
What Is CRM?
Managing the full 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 help them
become customer-focused businesses. CRM uses information technology to create a
cross-functional enterprise system that integrates and automates many of the customerserving 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 a companys
business operations. CRM systems include a family of software modules that provides
the tools that enable a business and its employees to provide fast, convenient,
dependable, and consistent service to its customers. Siebel Systems, Oracle, PeopleSoft, SAP AG, and E.piphany are some of the leading vendors of CRM software.
Figure 6.1 illustrates some of the major application components of a CRM system.
Lets take a look at each of them.
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 touchpoints, such as telephone, fax, e-mail, the companys Web
site, 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 conguration, and sales quote generation capabilities. CRM also gives them real-time
access to a single common view of the customer, enabling them to check on all
F i g u re 6 . 1
The major application
components of a customerrelationship management
system.
Marketing and
Fulfilment
Sales
Cross-sell
Up-sell
Fax
Customer
Service and
Support
Prospect or
Customer
Telephone
Contact and
Account
Management
Web
Retention
and Loyalty
Programs
Source: Adapted from Ravi Kalakota and Marcia Robinson, E-Business 2.0: Roadmap for Success
(Reading, MA: Addison-Wesley, 2001), p. 180. 2001 Addison-Wesley Publishing Company,
Inc. Reprinted by permission of Addison-Wesley Longman, Inc.
178
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.
Marketing and
Fullment
Customer Service
and Support
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 centre software routes calls to customer-support agents based on their
skills and authority to handle specic 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 Web site, while giving them an option to receive
further assistance online or by phone from customer-service personnel.
Retention and
Loyalty Programs
It costs six times more to sell to a new customer than to sell to an existing one.
A typical dissatised customer will tell eight to ten people about his or her
experience.
A company can boost its prots 85% by increasing its annual customer
retention by only 5%.
The odds of selling a product to a new customer are 15%, whereas the odds
of selling a product to an existing customer are 50%.
Seventy percent of complaining customers will do business with the company
again if it quickly takes care of a service snafu [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 its most loyal and
protable customers. CRM analytical software includes data mining tools and other
analytical marketing software, while CRM databases may consist of a customer data
warehouse and CRM data marts. These tools are used to identify protable and loyal
customers and direct and evaluate a companys targeted marketing and relationship
marketing programs toward them. Figure 6.2 is an example of part of a proposed
Web-based report format for evaluating Charles Schwab & Co.s customer retention
performance.
Telstra
Corporation:
The Business
Value of CRM
F i g u re 6 . 2
Customer
Retention
Navigation
Performance
Operations
Environment
Customer-retention
rate
Retention rate by
customer cohort
Percentage of customers
who are active Web users
Competitors offers
Household-retention
rate
Retention rate by
customer segment
Percentage of customers
who interact via e-mail
Comparative retention
Average customer
tenure
Customer loyalty
rating
Comparative customer
tenure
Customer satisfaction
by:
Task
Touchpoint
Channel partner
Customer
Satisfaction by
Experience customer segment
Satisfaction by
cohort
Satisfaction by
customer scenario
Customer
Spending
Propensity to defect
Comparative satisfaction:
Competitors:
Other online brokers
Other financial service
firms
All products and
services
Percentage of e-mails
answered accurately
in one hour
Average profitability
per customer
Growth in customer
assets
Growth in customer
assets per segment
Customer lifetime
value
Share of portfolio
Percentage increase in
customer assets
Cost to serve by
touchpoint
Source: Adapted from Patricia Seybold, The Customer Revolution (New York: Crown Business, 2001), p. 225.
To succeed in transforming its relationship with its customers, Telstra determined that it needed a CRM solution that would provide both its customer-facing
employees and channel partners a single view of each customer relationship.
The solution would also require the integration of more than 20 core legacy
billing and operations databases across all of its product lines. After exploring
several options, Telstra chose a variety of Siebel Systems products to provide its
e-business solution.
For its initial deployment, Telstra rolled out a Siebel Call Center to more than
250 telesales representatives and 150 telephone account managers in its outbound
call centres, which are geographically dispersed throughout Australia. This was
where we could most quickly impact our business, explains Ross Riddoch, general
manager of retail technology products. We rolled out account, contact, and
opportunity management modules. This Siebel CRM product was deployed in
approximately three months, on time and on budget.
User acceptance and business benets quickly followed. Users found the
Siebel Call Centers Web-based interface to be extremely intuitive and easy to
use, says Riddoch. This enabled us to reduce our training time and get our
users up to speed in record time. Within four months of employing Siebel Call
Center, our account management team doubled its weekly revenue, and we
achieved a three-fold gain in employee productivity [26].
180
The Three
Phases of CRM
Figure 6.3 illustrates another way to think about the customer and business value
and components 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 its customers [9].
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 fullment. 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 CRM sales force automation and direct marketing and fullment
tools help companies cross-sell and up-sell to their customers, thus increasing
their protability to the business. The value perceived by customers is the
convenience of one-stop shopping at attractive prices.
Benefits and
Challenges
of CRM
F i g u re 6 . 3
How CRM supports the
three phases of the relationship between a business and
its customers.
Customer
Life Cycle
CRM
Functional
Solutions
Acquire
Enhance
Direct Marketing
Retain
Proactive Service
Customer Support
The Internet
Shared
Customer Data
CRM
Integrated
Solution
Partner
Collaborative
Service
Company
Customer
Source: Adapted from Ravi Kalakota and Marcia Robinson, E-Business 2.0: Roadmap for
Success (Reading, MA: Addison-Wesley, 2001), p. 179, 2001 Addison-Wesley Publishing
Company, Inc., reprinted by permission of Addison-Wesley Longman Inc.; and Craig
Fellentstein and Ron Wood, Exploring E-commerce, Global E-business, and E-societies
(Upper Saddle River, NJ: Prentice-Hall, 2000), p. 192.
Boise Cascade:
Success in
Customer Service
CRM Failures
182
Therefore, employees and customers were not prepared for the new processes or
challenges that were part of the new CRM implementation. We will discuss the topic
of failures in information technology management, system implementation, and
change management further in Chapters 9 and 12.
Gevity HR and
Monster.com:
Failures in CRM
Implementation
No amount of high-level cooperation will protect a CRM project from rank-andfile employees who hate it. Lisa Harris, CIO at HR-services rm Gevity HR based
in Bradenton, Florida, faced rebellion from the staff when she installed Oracle
CRM software that helped solve some customers problems onlinewithout the
help of a live operator. Call centre employees felt that the software threatened
their jobs, so they quietly discouraged customers from using it. Our operators
would say, Wouldnt you rather call us? Ill take care of everything you need,
Harris says. She stuck with the online CRM, but also belatedly began talking to
employees about the software. She changed their work routines to include more
customer hand-holding and less data entry, which was increasingly done online.
CRM software is complex to install because it often touches many different
legacy systems. Harris says she spent millions of dollars integrating a CRM application in 1997 for a previous employer. But when the project was nished, it took
operators too long to get data on-screen. The company had bogged down the
performance of the new CRM implementation by trying to integrate too many
complex business systems. The project ended up a total failure, she says [2].
And when Monster.com rolled out a CRM program in 1998, it was sure it had
a new moneymaking strategy on its hands. The Massachusetts-based job listings
company had invested over $1 million in customized software and integrated all
of its computer systems in an attempt to boost the efciency of its sales force.
These CRM applications had been specially developed to allow Monster.coms
sales representatives instant access to data for prospective customers.
However, the new system proved to be frighteningly slowso slow, in fact,
that salespeople in the eld found themselves unable to download customer information from the companys databases onto their laptops. Every time they tried,
their machines froze. Eventually, Monster.com was forced to rebuild the entire
system. It lost millions of dollars along the way, not to mention the goodwill of
both customers and employees [19].
Trends in CRM
F i g u re 6 . 4
Many companies are implementing CRM systems with some or all of these capabilities.
Types of CRM
Operational CRM
Business Value
Analytical CRM
Allows you to analyze, predict, and derive customer value and behaviour and forecast demand
Lets you approach your customers with relevant information and offers that are tailored to
their needs
Collaborative CRM
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
Source: Adapted from mySAP Customer Relationship Management, mySAP.com, 2001, p. 7; and Brian Cauleld, Toward a More Perfect
(and Realistic) E-Business, Business 2.0, January 2002, p. 80.
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 collaborative CRM tools for customers, employees, and business partners [3, 9].
Lets look at a real world example.
Telstra
Corporation:
Expanding the
Scope of CRM
The success of Telstras initial implementation of a CRM system led the company
to expand its CRM deployment to target four work streams: sales and account
management, commissions, order fullment, and marketing. Based on this strategy,
Telstra is now managing seven concurrent projects and rolling out e-business applications to the majority of its eld sales, call centre, telesales, and business partners.
Within its marketing organization, for example, Telstra has deployed Siebel
Marketing and Siebel eAnalytics applications to more than 80 marketing professionals. These CRM applications enable Telstras marketing managers to perform
customer segmentation analysis using customer information from across all touchpoints and create targeted campaigns that effectively reach its customers through
call centres, direct mail, and e-mail. They also help Telstra manage, analyze, and
track channel and marketing effectiveness through real-time reporting, enabling
the company to continually rene its marketing efforts across all channels.
To better integrate partners into its channel system, Telstra also is deploying
Siebel eChannela Web-based partner-relationship management portal for communication of customer and sales data between Telstra and its many business
partners. By integrating its channel partners into its CRM system, Telstra wants to
ensure that it maintains a seamless view of the customer across all points of interaction between customers, partners, and Telstra customer-facing professionals [25].
184
Section II
Introduction
Analyzing Indigo
Books & Music Inc.
Adonix and
Tangerine: French
Firm Sees Canadian
ERP Opportunity
with SMBs
Read the Real World Case on Indigo Books & Music Inc. on the next page. We can
learn a lot about issues that should be considered in selecting and implementing an
ERP system.
Indigo Books & Music Inc. selected mySAP Retail as its IT platform for all retail
operations. The system helps the national retailer perform inventory and category
management, supply chain management, and customer-relationship management
across its entire operation, including its 89 superstores, its 188 mall stores, and its
online division.
Re a l W o r l d C a s e 2
Indigo Books & Music In c.:
Select i ng a nd Implement i ng a n ERP System
186
F i g u re 6 . 5
The major application
components of enterprise
resource planning
demonstrate the crossfunctional approach of
ERP systems.
Production
Planning
Sales,
Distribution,
Order
Management
Integrated
Logistics
Customer/
Employee
Human
Resources
Accounting and
Finance
Source: Adapted from Ravi Kalakota and Marcia Robinson, e-Business 2.0:
Roadmap for Success (Reading, MA: Addison-Wesley, 2001), p. 243. 2001
Addison-Wesley Publishing Company, Inc. Reprinted by permission of
Addison-Wesley Longman, Inc.
What Is ERP?
ERP 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 nance [9].
Enterprise resource planning is a cross-functional enterprise system driven by an
integrated suite of software modules that supports the basic internal business processes
of a company. For example, ERP software for a manufacturing company will typically
process the data from and track the status of sales, inventory, shipping, and invoicing,
as well as forecast raw material and human resources requirements. Figure 6.5 presents
the major application components of an ERP system. Figure 6.6 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 man-
F i g u re 6 . 6
Production Materials
Some of the business process ows and customer and supplier information ows supported by
ERP systems.
Manufacturing
Process
Forecast
Requirements
Order-Fulfilment
Process
Delivered Orders
Customer Forecast
Planning Processes
Procurement
Process
Order Capture
Process
Customer Orders
Source: Adapted from Grant Norris, James Hurley, Kenneth Hartley, John Dunleavy, and John Balls, E-Business and ERP:
Transforming the Enterprise, p. 83. 2000 by John Wiley & Sons, Inc. Reprinted by permission.
agement system. ERP systems track business resources (such as cash, raw materials,
and production capacity), and the status of commitments made by the business (such
as customer orders, purchase orders, and employee payroll), no matter which department (manufacturing, purchasing sales, accounting, etc.) has entered the data into
the system [21].
ERP software suites typically consist of integrated modules of manufacturing,
distribution, sales, accounting, and human resources 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. ERP
systems support many vital human resources processes, from personnel requirements
planning to salary and benets administration, and accomplish most required nancial
record-keeping and managerial accounting applications. Figure 6.7 illustrates the
processes supported by the ERP system installed by the Colgate-Palmolive Company.
Lets take a closer look at the companys experience with ERP.
Colgate Palmolive:
The Business Value
of ERP
Benets and
Challenges of ERP
As the example of Colgate-Palmolive has just shown, ERP systems can generate signicant business benets for a company. Many other companies have found major
business value in their use of ERP in several basic ways [15]:
Quality and Efciency. ERP creates a framework for integrating and
improving a companys internal business processes that results in signicant
improvements in the quality and efciency of customer service, production,
and distribution.
Decreased Costs. Many companies report signicant reductions in transaction
processing costs and hardware, software, and IT support staff compared to the
non-integrated legacy systems that were replaced by their new ERP systems.
188
F i g u re 6 . 7
Demand
Planning
The business processes and functions supported by the ERP system implemented by the
Colgate-Palmolive Company.
Manufacturing
Planning
Logistics
Planning
Distribution
Planning
Order
Entry
Purchasing
& Accounts
Payable
MRP
Inbound
Inventory
Plant Mgmt.
Manufacturing
& Production
Scheduling
Inventory
Control &
Warehousing
Distribution
& Accounts
Receivable
Customers
Suppliers
F i g u re 6 . 8
Typical costs of implementing a new ERP system.
Hardware
12%
Software
15%
Re-Engineering
43%
Training and
Change
Management
15%
Data
Conversions
15%
Companies like Sobeys Inc., Hershey Foods, Nike, A-Dec, and CIGNA sustained
losses running into hundreds of millions of dollars in some instances. In the case of
FoxMeyer Drugs, a $5-billion pharmaceutical wholesaler, the company had to le for
bankruptcy protection and then was bought out by its arch competitor McKesson
Corp. [9]. Lets take a look at an example of a more recent failed ERP project.
Sobeys Inc.:
Failure in ERP
Implementation
190
problems of a much more serious nature. McEwan, who inherited the SAP
implementation when he joined Sobeys in November 2000, added that it would
have taken another two years to nish the software rollout.
The system shutdown in December 2000 resulted in unprecedented out-ofstock issues with products at many of Sobeys corporate-owned stores, McEwan said.
The disruption also forced Sobeys to implement work-arounds for its accounting
department. Sobeys plans to replace the SAP applications with software that can
be installed more quickly and that will fully meet all the business requirements
at the company, McEwan said [14].
Causes of ERP
Failures
Reebok and
Home Depot:
Success with ERP
Trends in ERP
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 change management programs, or trying to do too much too fast
in the conversion process, were typical causes of failed ERP projects. Insufcient
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 overreliance by company or IT management on the claims of
ERP software vendors or the assistance of prestigious consulting rms hired to lead
the implementation [11]. The following experiences of companies that did it right
give us a helpful look at what is needed for a successful ERP implementation.
SAP Retail is a good ERP product, argues Kevin Restivo, a Canada-based analyst
who works for IDC in Framingham, Massachusetts. But technology is never a
silver bullet, just part of a larger puzzle that includes making sure internal business processes are in tune with the softwares capabilities, Restivo said. Thats
especially true given the processing complexities faced by retailers, he added.
In late 1998, Reebok International Ltd. was the rst U.S. company to go live
with SAP Retail, which now supports 115 outlet stores run by the Stoughton,
Massachusettsbased footwear maker. Peter Burrows, Reeboks chief technology
ofcer, said the SAP ERP system is producing a very high level of stock accuracy
in the stores. But the year-long development and installation process wasnt easy
and required some adjustments as the project went along, Burrows said.
The Home Depot, Inc. recently completed an SAP ERP installation in the
companys Argentina operations. Gary Cochran, vice-president of information
services, said he made limited use of SAPs consulting services. Instead, Cochran
put together a team of 50 top employeesIT personnel and end-users. Because
of the teams familiarity with the traditional legacy systems, he said, it didnt have to
face some of the conguration issues that have been problematic for other people.
It went so smoothly there was literally no ripple in corporate organization,
Cochran said [13].
Figure 6.9 illustrates four major developments and trends evolving in ERP applications
[9, 12]. First, the ERP software packages that were the mainstay of ERP implementations in the 1990sand were often criticized for their inexibilityhave
gradually been modied into more exible products. Companies that installed ERP
systems pressured software vendors to adopt more open, exible, standards-based
software architectures. This makes the software easier to integrate with other
application programs of business users, as well as making it easer to make minor
modications to suit a companys business processes. An example is SAP R/3 Enterprise, released in 2002 by SAP AG as a successor to earlier versions of SAP R3.
Other leading ERP vendors, including Oracle, PeopleSoft, and J. D. Edwards, have
also developed more exible ERP products.
Web-enabling ERP software is a second development in the evolution of ERP.
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 ERP systems easier to use and
connect to other internal applications, as well as the systems of a companys business
partners. This Internet connectivity led to the development of interenterprise ERP
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 signalled 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 mySAP. 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 6.10 and then lets
look at a real world example.
F i g u re 6 . 9
Trends in the evolution
of ERP applications.
e-Business Suites
Interenterprise ERP
Web-enabled ERP
Flexible ERP
Source: Adapted from Ravi Kalakota and Marcia Robinson, E-Business 2.0: Roadmap for
Success (Reading, MA: Addison-Wesley, 2001), p. 244. 2001 Addison-Wesley Publishing
Company, Inc. Reprinted by permission of Addison-Wesley Longman, Inc.
192
F i g u re 6 . 1 0
Business Intelligence
Enterprise Asset Management
Human Resources
Marketing
Product Development
Sales
Treasury
Contracts
Exchanges
Interaction Centre
Order Fulfilment
Professional Services Automation
Service
Source: Adapted from Oracle Corporation, E-Business Suite: Manage by Fact with Complete Automation and Complete Information,
Oracle.com, 2002.
Visa International:
Implementing an
e-Business Suite
Despite the innovations brought to global commerce by Visas sophisticated consumer payments processing system, Visa International had surprisingly outdated
systems managing some of its most critical internal business processes. KPMG
did an analysis of our business and found that our internal systems were becoming
a risk to our organization, said Gretchen McCoy, senior vice-president of Visa
International. We were in the red zone.
McCoy found that Visas internal systems were unnecessarily complex and
utilized few of the advantages that technology can bring to an enterprise. The nancial management infrastructure was fragmented, complex, and costly to maintain.
Data were not standardized, resulting in many different databases making disparate
interpretations of business data. Corporate purchasing, accounts payable, and
asset management were managed manually, resulting in time-consuming delays
and discrepancies. Fragmented internal systems are not unusual in a company that
experiences rapid growth. Visa experienced double-digit growth for 11 consecutive years. Visa chose Oracle E-Business Suite to remedy the problems that come
with a complex and inefcient back ofce.
The resulting implementation turned Visas cumbersome, outdated desktop
procedures into Web-based e-business solutions that met Visas demands for all
roles and processes. For example, Oracle Financials automated Visas old organization and created a more agile system capable of accounting for the impact of
nancial activities on a global scale. Accounts payable was transformed from a
cumbersome manual process into a streamlined system that automatically checks
invoices against outgoing payments and requests review of any discrepancies via
e-mail. And Oracle iProcurement helped automate Visas requisitioning and purchasing system by streamlining the entire purchasing process and implementing
a self-service model to increase processing efciency, said McCoy [17].
Section III
Introduction
Analyzing Wal-Mart
and Mattel
Read the Real World Case on Wal-Mart and Mattel on the next page. We can learn
a lot from this case about how optimal supply chain management is used in support
of a companys strategic advantage.
Canadian businesses are still gun-shy about supply chain management technology.
You hear it in the way they dance around the technological issues and focus on
the basic business bottom line. We have a vision for our company, to have a
technologically enabled eet and distribution system, says Yannick Rivard, manager
of delivery services at the Socit des alcools du Qubec (SAQ), the provincial
liquor board. But the technology itself wasnt the goal.
The goal was to create a system to track every shipment and every truck in
SAQs eet to ensure the safety of drivers on the provinces long rural highways
and make sure the booze keeps owing to the corporations 400 outlets. Every
truck has an onboard computer and GPS; every case of wine is followed from the
warehouse to the customers hands. If you need to know if theres a case of
Chteau Late Rothschild 1964 in transit between Montral and Trois Rivires,
Rivard can tell you. He uses logistics management software from Waterloo,
Ontario-based Descartes Systems. He just doesnt use terms such as SCM to
describe it. I can distribute products without it, he says. That isnt the point.
The point is we can manage our distribution more efciently, eliminate duplicate
routes, reduce costs, and improve service.
Rivards view is fairly typical of that of Canadian businesses that were burned
when the economic asteroid of 2001 smashed into the e-commerce boom and
sent the economy reeling. The whole industry and economy went through a
major slowdown in the last two years, says John Kellett, Canadian general manager
of Descartes Systems. The trend were seeing today is customers who are ready
to take out cost and add services, even if theyre not eager to be on the technological bleeding edge [5].
Re a l W o r l d C a s e 3
Wal-Mart a nd Mattel:
Supply Cha i n Ma nagement Be st Pract ice s
What Is SCM?
Legacy supply chains are clogged with unnecessary steps and redundant stockpiles. For
instance, a typical box of breakfast cereal spends an incredible 104 days getting from
factory to supermarket, struggling its way through an unbelievable maze of wholesalers, distributors, brokers, and consolidators, each of which has a warehouse. The
e-commerce opportunity lies in the fusing of each companys internal systems to those
of its suppliers, partners, and customers. This fusion forces companies to better integrate interenterprise supply chain processes to improve manufacturing efciency and
distribution effectiveness [9].
So, supply chain management is 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. The goal of SCM is to create a fast, efcient, and low-cost network of
business relationships, or a supply chain, to get a companys products from concept
to market.
What exactly is a companys supply chain? Lets suppose a company wants to
build and sell a product to other businesses. Then it must buy raw materials and a
variety of contracted services from other companies. The interrelationships with suppliers, customers, distributors, and other businesses that are needed to design, build,
and sell a product make up the network of business entities, relationships, and
processes that is called a supply chain. And since each supply chain process should
add value to the products or services a company produces, a supply chain is frequently
called a value chain, a different but related concept we discussed in Chapter 2. In
any event, many companies today are using Internet technologies to create interenterprise e-business systems for supply chain management that help a company
streamline its traditional supply chain processes.
Figure 6.11 illustrates the basic business processes in the supply chain life cycle
and the functional SCM processes that support them. It also emphasizes how many
companies today are re-engineering their supply chain processes, aided by Internet
technologies and supply chain management software. For example, the demands of
todays competitive business environment are pushing manufacturers to use their
intranets, extranets, and e-commerce Web portals to help them re-engineer their
relationships with their suppliers, distributors, and retailers. The objective is to signicantly reduce costs, increase efciency, and improve their supply chain cycle
times. SCM software can also help to improve interenterprise coordination among
supply chain process players. The result is much more effective distribution and
channel networks among business partners. The Web initiatives of Moen Inc. illustrate these developments.
Moen Inc.:
Web-Enabling
the Supply Chain
In late 1998, faucet maker Moen Inc. started sending electronic les of new
product designs by e-mail. A few months later, it launched ProjectNet, an online
extranet site where Moen can share digital designs simultaneously with suppliers
worldwide. Every supplier can make changes immediately. Moen consolidates all
of the design changes on a master Web le. That way, design problems are
discovered instantly and adjustments can be made just as quickly, cutting the time
it takes to lock in a nal design to three days.
Next, the company attacked the cumbersome process of ordering parts from
suppliers and updating them by fax or phone. In October 2000, the company
launched its SupplyNet extranet site that allows parts suppliers to check the status
of Moens orders online. Every time Moen changes an order, the supplier receives
an e-mail. If a supplier cant ll an order in time, it can alert Moen right away so
the faucet maker can search elsewhere for the part. Today, the 40 key suppliers who
make 80% of the parts that Moen buys use SupplyNet. The result: The company
196
F i g u re 6 . 1 1
Supply chain management
software and Internet technologies can help companies
re-engineer and integrate the
functional SCM processes
that support the supply chain
life cycle.
Supply
Chain
Life Cycle
Commit
Strategic Sourcing
and Procurement
SCM
Functional
Processes
Schedule
Make
Deliver
SCM
Integrated
Solution
Supplier
Manufacturer
Collaborative
Fulfilment
Retailer
Customer
Source: Adapted from Ravi Kalakota and Marcia Robinson, E-Business 2.0: Roadmap for Success (Reading,
MA: Addison-Wesley, 2001), pp. 280289, 2001 Addison-Wesley Publishing Company, Inc., reprinted
by permission of Addison-Wesley Longman, Inc.; and Craig Fellenstein and Ron Wood, Exploring
E-commerce, Global E-business, and E-societies (Upper Saddle River, NJ: Prentice-Hall, 2000), p. 192.
has shaved $3 million, or almost 6%, off its raw materials and work-in-progress
inventories since October.
Moens approach is high-speed compared with that of competitors, many of
which still rely on fax machines to do most of their business. The percentage
of companies using the Net to speed the supply chain in the construction/home
improvement eld, which includes plumbing, is expected to rise to just 7.7% in
2004, up from 3.2% in 2000, according to Forrester Research. Moen is a step
ahead of its peers in embracing Internet technologies, says analyst Navi Radjou
of Forrester Research.
Moen may be ahead of its peers, but theres plenty of work to do. The most
sensitive task is CustomerNet, the companys attempt to wire wholesalers, which
account for 50% of the companys business. Unlike suppliers, who depend on
Moen for most of their business, the company has little sway with wholesalers
that buy plumbing, heating, and other productsnot just faucetsfrom many
manufacturers. Most still order by fax, even though that process causes errors up
to 40% of the time. Moen execs are undaunted. Theyre courting wholesalers with
the same methodical determination that has made Moen a Web-smart company [10].
Electronic Data
Interchange
Electronic data interchange (EDI) was one of the earliest uses of information
technology for supply chain management. EDI involves the electronic exchange of
business transaction documents over the Internet and other networks between
supply chain trading partners (organizations and their customers and suppliers). Data
representing a variety of business transaction documents (such as purchase orders,
invoices, requests for quotations, and shipping notices) are automatically exchanged
between computers using standard document message formats. Typically, EDI software
is used to convert a companys own document formats into standardized EDI formats as specied by various industry and international protocols. Thus, EDI is an
example of the almost complete automation of an e-commerce supply chain process.
And EDI over the Internet, using secure virtual private networks, is a growing B2B
e-commerce application.
Formatted transaction data are transmitted over network links directly between
computers, without paper documents or human intervention. Besides direct network
links between the computers of trading partners, third-party services are widely used.
Value-added network companies like GE Global Exchange Services and Computer
Associates offer a variety of EDI services for relatively high fees. But many
EDI service providers now offer secure, lower-cost EDI services over the Internet.
Figure 6.12 illustrates a typical EDI system [25].
EDI is still a popular data transmission format among major trading partners,
primarily to automate repetitive transactions, although it is slowly being replaced by
XML-based Web services. EDI automatically tracks inventory changes; triggers
orders, invoices, and other documents related to transactions; and schedules and
conrms delivery and payment. By digitally integrating the supply chain, EDI
streamlines processes, saves time, and increases accuracy. And by using Internet
technologies, lower-cost Internet-based EDI services are now available to smaller
businesses [28, 31].
Telefonica TSAI:
Internet EDI
F i g u re 6 . 1 2
A typical example of electronic data interchange activities, an important form of business-tobusiness electronic commerce. EDI over the Internet is a major B2B e-commerce application.
Supplier
Purchaser
Request for Quote
Purchase Order, Purchase Order Change, Receiving Notice,
and Payment Advice
Deposit
Notice
Payment
Remittance
Notice
Payment Remittance Notice
Electronic Transfer of Funds
Purchasers Bank
Payment
Remittance
Notice
Suppliers Bank
198
To tap into the sizeable market of smaller businesses that cant afford standard
EDI services, TSAI offers an Internet EDI service, InfoEDI, based on ECXpert
electronic commerce software. InfoEDI allows transactions to be entered and
processed on the Internet, so smaller trading partners no longer have to buy and
install special connections, dedicated workstations, and proprietary software. Instead,
they can access the EDI network through the Internet via TSAIs Web portal.
InfoEDIs forms-based interface lets businesses connect with the InfoEDI
simply by using modems and Web browsers. They can then interact with the
largest suppliers and retailers to send orders, issue invoices based on orders, send
invoice summaries, track status of documents, and receive messages. InfoEDI also
provides a product database that lists all details of trading partners products.
Once a trading relationship has been established, each partner has encrypted
access to details of its own products. Because those details remain accessible on
TSAIs Web server, users need enter only minimal information to create links to
that data, which are then plugged in as needed [31].
F i g u re 6 . 1 3
Figure 6.13 helps us understand the role and activities of supply chain management
in business more clearly. The top three levels of Figure 6.13 show the strategic, tactical, and operational objectives and outcomes of SCM planning, which are then
accomplished by the business partners in a supply chain at the execution level of SCM.
The role of information technology in SCM is to support these objectives with interenterprise information systems that produce many of the outcomes a business needs
to effectively manage its supply chain. Thats why many companies today are
installing SCM software and developing Web-based SCM information systems [17].
The objectives and outcomes of supply chain management are accomplished for a business
with the help of interenterprise SCM information systems.
SCM Objectives
SCM Outcomes
What?
Establish objectives, policies,
and operating footprint
Strategic
How much?
Deploy resources to match supply
to demand
Tactical
When? Where?
Schedule, monitor, control, and
adjust production
Do
Build and transport
Operational
Execution
Objectives
Supply policies (service levels)
Network design
Demand forecast
Production, procurement, logistics plan
Inventory targets
Work centre scheduling
Order/inventory tracking
Order cycle
Material movement
Source: Adapted from Keith Oliver, Anne Chung, and Nick Samanach, Beyond Utopia: The Realists Guide to Internet-Enabled Supply
Chain Management, Strategy and Business, Second Quarter, 2001, p. 99.
Until recently, SCM software products have typically been developed for either
supply chain planning or execution applications. SCM planning software from
vendors such as i2 and Manugistics support a variety of applications for supply and
demand forecasting. SCM execution software from vendors such as EXE Technologies
and Manhattan Associates supports applications like order management, logistics
management, and warehouse management. However, big ERP vendors like Oracle
and SAP are now offering Web-enabled software suites of e-business applications
that include SCM modules. Examples include Oracles E-Business Suite and SAP
AGs mySAP [3].
Figure 6.14 gives you a good idea of the major planning and execution functions
and outcomes that can be provided by SCM software as promised by mySAPs
supply chain management module. Now lets look at a real world example of an
SCM execution system.
Cardinal Glass:
Supply Chain
Event Management
A few years ago, Cardinal Glasss legacy systems were making it a weak link in
one of its key customers supply chain. The system, a hodgepodge of custom and
purchased applications, caused so many errors that it was shameful and embarrassing, says Dan Peterson, director of corporate information systems at the
Minneapolis-based maker of glass products. So when the customer decided that
its products required delivery on a just-in-time basis, with lead times of just hours,
there was no way the existing supply chain management applications could keep
up the pace.
Luckily, Cardinal found that by installing supply chain event management
(SCEM) applications from Minneapolis-based HighJump Software, it could deliver
products at nearly 100% accuracy. We probably cut the error rate by 90%,
Peterson says.
SCEM applications let companies seein real time, or as close as possible
whether their existing supply chain management (SCM) systems are working. The
applications are attached to an SCM server and get updates on supply chain
activity through middleware connectors. Depending on preset rules and benchmarks,
SCEM software can monitor SCM applications, run simulations of supply chain
scenarios, automatically take control of supply chain processes, or send out alerts
to customers, suppliers, and company management. Anomalies, such as a discrepancy in an order, will trigger appropriate alert and order fullment responses,
making the system more sensitive to real-time needs.
Cardinal did contemplate replacing its legacy enterprise resources planning
(ERP) system, but Cardinal ofcials decided that they needed SCM execution
software. Cardinal wanted to address errors in the system on the y, he explains
something traditional supply chain management and ERP systems wouldnt be
able to do.
At Cardinal, when an order is received, inventory is checked immediately for
availability. If a shortage is detected, the HighJump SCEM system will send alerts
via e-mail to the customer and appropriate Cardinal managers. This speeds up
the supply chain, reducing lead times and meeting their customer responsiveness
goals, says Peterson. There were bottom-line benets, too. The SCM execution
system cut by about two-thirds the amount of personnel needed to compensate
for errors such as inventory erroneously being marked in when it wasnt there,
or shipments being sent incorrectly [29].
200
F i g u re 6 . 1 4
The supply chain management functions and potential benets offered by the SCM module in
the mySAP e-business software suite.
SCM Functions
SCM Outcomes
Planning
Supply chain design
Collaborative demand
and supply planning
Execution
Materials management
Collaborative
manufacturing
Optimize plans and schedules while considering resource, material, and dependency
Collaborative
fulfilment
constraints
Support the entire logistics process, including picking, packing, shipping, and delivery in
foreign countries
Monitor every stage of the supply chain process, from price quotation to the moment the
Report key measurements in the supply chain, such as filling rates, order cycle times, and
customer receives the product, and receive alerts when problems arise
capacity utilization
Source: Adapted from SAP AG, mySAP Supply Chain Management, mySAP.com, 2002, p. 8.
Benefits and
Challenges of
SCM
Creating a real-time SCM infrastructure is a daunting and ongoing issue and quite
often, a point of failure, for several reasons. The chief reason is that the planning,
selection, and implementation of SCM solutions is becoming more complex as the pace of
technological change accelerates and the number of a companys partners increases [9].
The real world experiences of companies like Cardinal Glass and the promised outcomes that are outlined in Figure 6.14 emphasize the major business benets that are
possible with effective supply chain management systems. Companies know that SCM
systems can provide them with key business benets such as faster, more accurate
order processing, reductions in inventory levels, quicker time to market, lower transaction and materials costs, and strategic relationships with their suppliers. All of these
benets of SCM are aimed at helping a company achieve agility and responsiveness
in meeting the demands of its customers and the needs of its business partners.
Developing effective SCM systems has proven to be a complex and difcult
application of information technology to business operations, however. So achieving
the business value and customer value goals and objectives of supply chain management, as illustrated in Figure 6.15, has been a major challenge for most companies.
What are the causes of problems in supply chain management? Several stand out.
A lack of proper demand planning knowledge, tools, and guidelines is a major source
of SCM failure. Inaccurate or overoptimistic demand forecasts will cause major production, inventory, and other business problems, no matter how efciently the rest
F i g u re 6 . 1 5
Achieving the goals and
objectives of supply chain
management is a major
challenge for many
companies today.
Interenterprise
Coordination of
Manufacturing and
Business Process
Effective
Distribution and
Channel Partnerships
Responsiveness and
Accountability
to Customers
Solectron Corp.:
Failures in SCM
202
The supplier-facing applications arena will see the continued growth of public as well
as private networks that transform linear and inexible supply chains into nonlinear
and dynamic fulllment networks. Supplier-facing applications will also evolve along
another dimension: from automation and integration of supply chains to collaborative
sourcing, planning, and design across their supplier networks [21].
Trends in SCM
Figure 6.16 illustrates the trends in the use of supply chain management today as
three possible stages in a companys implementation of SCM systems. In the rst
stage, a company concentrates on making improvements to its internal supply chain
processes and its external processes and relationships with suppliers and customers.
Its e-commerce Web site and those of some of its trading partners provide access
to online catalogues and useful supply chain information, while supporting limited
online transactions.
In stage two, a company accomplishes substantial supply chain management
applications by using selected SCM software programs internally, as well as externally via intranet and extranet links among suppliers, distributors, customers, and
other trading partners. Companies in this stage also concentrate on expanding the
business network of Web-enabled SCM-capable trading partners in their supply
chain to increase its operational efciency and effectiveness in meeting their strategic business objectives.
In the third stage, a company begins to develop and implement cutting-edge collaborative supply chain management applications using advanced SCM software, fullservice extranet links, and private and public e-commerce exchanges. Examples include
collaborative supply chain planning and fullment applications such as collaborative
product design and delivery, and collaborative planning, forecasting, and replenishment
(CPFR). In addition, collaborative marketing sales, and service applications with
trading partners, including customer- and partner-relationship management systems,
may be developed. Companies in this third stage strive to optimize the development
and management of their supply chains in order to meet their strategic customer
value and business value goals [18]. Lets look at two real world examples.
F i g u re 6 . 1 6
Information
Sharing
Product/Sales Data
Sourcing Help
Logistics
Order Fulfilment
Order
Management
Inventory
Management
Resource Allocation
Systems Use and
Integration
Collaborative
Marketing
Sales and Service
SCM Optimization
Collaborative Design
and Delivery
SCM Stage 1
SCM Stage 2
SCM Stage 3
Source: Adapted from Charles Poirier and Michael Bauer, E-Supply Chain: Using the Internet to Revolutionize Your Business (San Francisco:
Berrett-Koehler Publishers, 2000), p. 79.
CVS, McKesson,
and MPT:
Web-Based SCM
Integration
CVS is a leading drug retail chain, while McKesson is the largest U.S. distributor of pharmaceuticals, health care products, and medical/surgical supplies, with
annual sales in excess of $20 billion. Better integration with McKesson is a key
strategic move for CVS, as management sees signicant potential for improving
sales and margins through its enhanced pricing and promotional forecasting systems.
Supply chain integration helps the retailer move from pull to push promotions
by allowing marketing managers to plan promotions more effectively, using item
history taken from historical point-of-sale data on a store-by-store basis. The
integration with McKesson substantially reduces the amount of time needed to
plan and to stock inventory for individual promotions.
A major objective in the CVSMcKesson chain is to improve business
performance through better supply chain integration. This requires much closer
cooperation between McKesson and CVS, with McKesson taking responsibility
even for CVS stock levels. McKesson monitors CVSs store-level consumption via
Web extranet links and replenishes the inventory to meet the agreed-on service
levelstrue supply chain integration. This cooperative process between supplier
and customer is achieved through seamless interenterprise process integration and
advanced SCM applications that link CVS directly to McKessons production
department [9].
Not every supply chain application requires a hefty up-front investment,
however. Modern Plastics Technology (MPT), an injection mould manufacturer
in Port Huron, Michigan, spends just several hundred dollars per month to access
the i-Supply Service Web-based supply chain application from SupplySolution,
Inc. The company had been using electronic data interchange transmissions to
ll its orders and was having a tough time keeping up with unscheduled changes
in orders, says Doug Archer, vice-president of Modern Plastics.
Then a large sealant manufacturer that was one of their customers persuaded
Modern Plastics to connect with its i-Supply Service application. This Web-based
SCM system enables them to see what their customers need on a real-time basis.
Modern Plastics runs 30 to 40 different products through its presses, and i-Supply
now allows management to better plan long production runs or prioritize specic
product runs. Additionally, i-Supply helps MPT accomplish more accurate demand
forecasting and production scheduling [30].
204
Summary
Customer-Relationship Management: The Business
Focus. Customer-relationship management is a crossfunctional enterprise system that integrates and automates many of the customer-serving processes in sales,
marketing, and customer service that interact with a
companys customers. CRM systems use information
technology to support the many companies that are
reorienting themselves into customer-focused businesses as a top business strategy. The major application
components of CRM include contact and account
management, sales, marketing and fullment, customer
service and support, and retention and loyalty programs,
all aimed at helping a company acquire, enhance, and
retain protable relationships with its customers as a
primary business goal. However, many companies have
found CRM systems difcult to properly implement
due to a lack of adequate understanding and preparation
by management and affected employees. Finally, many
companies are moving toward collaborative CRM
systems that support the collaboration of employees,
business partners, and the customers themselves in
enhancing protable customer relationships.
Supply chain management is a cross-functional interenterprise system that integrates and automates the
network of business processes and relationships between
a company and its suppliers, customers, distributors, and
other business partners. The goal of SCM is to help a
company achieve agility and responsiveness in meeting
the demands of its customers and the needs of its suppliers, by enabling it to design, build, and sell its products
using a fast, efcient, and low-cost network of business
partners, processes, and relationships, or supply chain.
SCM is frequently subdivided into supply chain planning
applications, such as demand and supply forecasting,
and supply chain execution applications, such as inventory management, logistics management, and warehouse
management. Developing effective supply chain systems
and achieving the business goals of SCM has proven to
be a complex and difcult challenge for many rms.
But SCM continues to be a major concern and top
e-business initiative, as companies increase their use
of Internet technologies to enhance integration and
collaboration with their business partners, and improve
the operational efciency and business effectiveness of
their supply chains.
K e y Te r m s a n d C o n c e p t s
These are the key terms and concepts of this chapter. The page number of the rst explanation of each is in parentheses.
1. Customer-relationship
management (174)
a. Application components (177)
4. Enterprise resource
planning (184)
a. Application
components (195)
c. Challenges (180)
d. Trends (182)
c. Challenges (187)
c. Challenges (200)
d. Trends (191)
d. Trends (202)
For more resources, log on to the Online Learning Centre at www.mcgrawhill.ca/college/obrien and access
Student Edition.
Re v i e w Q u i z
Match one of the key terms and concepts listed previously with one of the brief examples or denitions that follow. Try to nd
the best t for answers that seem to t more than one term or concept. Defend your choices.
1. A cross-functional enterprise system that helps a
business develop and manage its customer-facing
business processes.
Discussion Questions
1. Should every company become a customer-focused
business? Why or why not?
2. Why would systems that enhance a companys relationships with customers have such a high rate of failure?
206
Ap p l i c a t i o n E x e rc i s e s
Complete the following exercises as individual or group projects that apply the chapter concepts to real world business situations.
1. NetLedger/Oracle Corporation: Oracle Small
Business Suite
Web NetLedger Inc., the company that developed
and markets the Oracle Small Business Suite for
the Oracle Corporation, was selected by Time magazine
as one of the ve best Web sites in the Managing a
Small Business category of Times guide to the best
Web sites for business (NetLedger Inc. news release,
December 9, 2002). Check out NetLedgers Web site
at www.netledger.com, then click on Products and then
on Oracle Small Business Suite for access to extensive
information on this e-business software suite for small
businesses. See Figure 6.17.
a. What are the business benets of this suite of online
business software and services?
b. What are the limitations and disadvantages of this
and similar online software applications?
F i g u re 6 . 1 7
The NetLedger Inc. Oracle
Small Business suite.
Re a l Wo r l d C a s e 4
Call Centre s:
CRM Challenge s
he rise of voice over Internet protocol and broadband technology will drive the call centre industry
toward a more distributed working environment,
according to experts at a Call Centre and CRM Solutions
Canada (www.cc-crmcanada.com) conference. In the next
three years, a panel of vendors and customers predicted, call
centres will be making better use of interactive voice response
(IVR), agents will be working from home, and Web-based
training tools will improve the relationship between managers
and call centre agents. They also said customers would
increasingly use self-service applications and guided selling
experiences over a companys Web site. The workstations
used by individual call centre agents, meanwhile, will be
much less complex than they are today, said Patte Seaton,
Bell Canadas (www.bell.ca) vice-president of customer care,
who oversees the phone companys 21 call centre locations
across Ontario. I think, too, with some of the issues people
have with telemarketing, that will also move over to the Web.
Kevin Hegebarth, director of strategic planning at call
centre software provider Witness Systems (www.witness.com),
said technology is starting to allow the formation of virtual
call centres, where agents are working remotely. Gone will
be the days where we have 1,000 people working in the same
building, he said. With the Web, decentralization will be
almost inevitable. Centralization has its advantagesyou
can manage all of the people in the same placebut I think
the industry as a whole is moving away from that.
In the meantime, however, call centres across the country are struggling to offer consistent levels of service and
provide the kind of customer-relationship management that