McGraw-Hill/I rwin Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

Enterprise Business Systems

8-2
Identify and give examples to illustrate the
following aspects of customer relationship,
enterprise research, and supply chain
management systems
Business processes supported
Customer and business value provided
Potential challenges and trends
Learning Objectives
8-3
Customer Relationship Management
A customer-centric focus
Customer relationships have become a companys
most valued asset
Every companys strategy should be to
find and retain the most profitable
customers possible
8-4
Case 1: Business Benefits of CRM
Forex Capital Markets trades $20 billion
worth of currency per month
12,000 clients in 70 countries
Tracking sales leads and prospects
Began with Excel spreadsheets
Switched to Access database
Volume forced move to CRM system
Access controlled through data security
and information sharing privileges
8-5
Case 1: Business Benefits of CRM
Wyse Technology
World leader in thin-client computing
Revenues in excess of $180 million
Doubled sales within 12 months of installing
CRM system
No additional staff needed
8-6
Case Study Questions
Why cant Microsoft Excel spreadsheets and
Access database software handle the customer
relationship needs of companies like FXCM?
What functions do CRM systems like Salesforce
provide to a company that these software
packages do not?
What business benefits has the Salesforce
CRM system provided to FXCM?
To Wyse Technology?
8-7
Case Study Questions
Salesforce.com is an example of an ASP
(application service provider), which was
discussed in Chapter 4.
What benefits do you see in this case for that
method of providing a CRM system to a company
versus installing a CRM software package?
What disadvantages might arise?
Which method would you prefer?
8-8
What is CRM?
Managing the full range of the customer
relationship involves
Providing customer-facing employees with a
single, complete view of every customer at
every touch point and across all channels
Providing the customer with a single, complete
view of the company and its extended channels
CRM uses IT to create a cross-functional
enterprise system that integrates and automates
many of the customer-serving processes
8-9
Application Clusters in CRM

8-10
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 business and life cycle events of customers
Data are captured through customer touchpoints
Telephone, fax, e-mail
Websites, retail stores, kiosks
Personal contact
8-11
Sales
A CRM system provides sales reps with the
tools and data resources they need to
Support and manage their sales activities
Optimize cross- and up-selling
CRM also provides the means to check on a
customers account status and history before
scheduling a sales call
8-12
Marketing and Fulfillment
CRM systems help with direct marketing
campaigns by automatic such tasks as
Qualifying leads for targeted marketing
Scheduling and tracking mailings
Capturing and managing responses
Analyzing the business value of the campaign
Fulfilling responses and requests
8-13
Customer Service and Support
A CRM system gives service reps real-time
access to the same database used by sales
and marketing
Requests for service are created, assigned,
and managed
Call center software routes calls to agents
Help desk software provides service data
and suggestions for solving problems
Web-based self-service enables customers
to access personalized support information
8-14
Retention and Loyalty Programs
It costs 6 times more to sell to a new customer
An unhappy customer will tell 8-10 others
Boosting customer retention by 5 percent can
boost profits by 85 percent
The odds of selling to an existing customer are
50 percent; a new one 15 percent
About 70 percent of customers will do business
with the company again if a problem is quickly
taken care of
8-15
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
8-16
The Three Phases of CRM

8-17
Benefits of CRM
Benefits of CRM
Identify and target the best customers
Real-time customization and personalization
of products and services
Track when and how a customer contacts
the company
Provide a consistent customer experience
Provide superior service and support across
all customer contact points
8-18
CRM Failures
Business benefits of CRM are not guaranteed
50 percent of CRM projects did not produce
promised results
20 percent damaged customer relationships
Reasons for failure
Lack of understanding and preparation
Not solving business process problems first
No participation on part of business stakeholders
involved
8-19
Trends in CRM
Operational CRM
Supports customer interaction with greater
convenience through a variety of channels
Synchronizes customer interactions consistently
across all channels
Makes the company easier to do business with
8-20
Trends in CRM
Analytical CRM
Extracts in-depth customer history, preferences,
and profitability from databases
Allows prediction of customer value
and behavior
Allows forecast of demand
Helps tailor information and offers to
customer needs
8-21
Trends in CRM
Collaborative CRM
Easy collaboration with customers,
suppliers, and partners
Improves efficiency and integration
throughout supply chain
Greater responsiveness to customer needs through
outside sourcing of products
and services
8-22
Trends in CRM
Portal-based CRM
Provides users with tools and information
that fit their needs
Empowers employees to respond to
customer demands more quickly
Helps reps become truly customer-faced
Provides instant access to all internal and
external customer information
8-23
ERP: The Business Backbone
ERP is a cross-functional enterprise backbone
that integrates and automates processes within
Manufacturing
Logistics
Distribution
Accounting
Finance
Human resources
8-24
Case 2: Business Value of ERP
Autosystems produces headlamps for
major automobile manufacturers
Until a few years ago, the manufacturing
process was managed with paper documents
An ERP system was installed, but did not
extend to the shop floor
Significant research was done before
deciding to add the shop floor reporting module
8-25
Case 2: Business Value of ERP
Installing PCs and ERP software on the shop
floor allows Autosystems to
Enter timely, accurate information
Plan more efficiently
Make production changes in order to avoid
labor or scrap problems
Discuss these issues with employees while they
are still current and meaningful
8-26
Case Study Questions
Why did Autosystems decide to install the
ActivEntry system?
Why did they feel it necessary to integrate
it with their TRANS4M ERP system?
Which three business benefits of the use of
ActivEntry provided the most business value?
What changes are already being planned to
improve the use of ActivEntry?
What other improvements should the
company consider?
8-27
What is ERP?
Enterprise resource planning is a cross-
functional enterprise system
An integrated suite of software modules
Supports basic internal business processes
Facilitates business, supplier, and customer
information flows
8-28
ERP Application Components

8-29
ERP Process and Information Flows

8-30
Benefits and Challenges of ERP
ERP Business Benefits
Quality and efficiency
Decreased costs
Decision support
Enterprise agility
ERP Costs
Risks and costs are considerable
Hardware and software are a small part
of total costs
Failure can cripple or kill a business
8-31
Costs of Implementing a New ERP

8-32
Causes of ERP Failures
Most common causes of ERP failure
Under-estimating the complexity of planning,
development, training
Failure to involve affected employees in
planning and development
Trying to do too much too fast
Insufficient training
Insufficient data conversion and testing
Over-reliance on ERP vendor or consultants
8-33
Trends in ERP

8-34
Supply Chain Management (SCM)
Fundamentally, 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

8-35
Goals of SCM
The goal of SCM is to efficiently
Forecast demand
Control inventory
Enhance relationships with customers, suppliers,
distributors, and others
Receive feedback on the status of every link in
the supply chain

8-36
Case 3: Applying Lean Logistics to SCM
The Tesco supermarket chain is a pioneer in
retailing
Used SCM to overcome disadvantage of
weak supplier leverage and expensive logistics
Changed product distribution methods to
reduce labor costs and inventory levels
Got suppliers to ship in smaller quantities,
preconfigured for sales display
Reduced total product touches from 150 to 50
Reduced throughput time from 20 days to 5
8-37
Case Study Questions
What key insights of Tescos SCM direction
Graham Booth helped revolutionize Tescos
supply chain and range of retail store formats?
Can these insights be applied to any kind of retail
business?
How did Dan Jones and the Cardiff Business
School of Wales demonstrate the inefficiencies
of the Tesco and Britvic supply chains?
Can this methodology be applied to the supply
chain of any kind of business?
8-38
Case Study Questions
What are the major business and competitive
benefits gained by Tesco as the result of its
supply chain initiatives?
Can other retail chains and retail stores
achieve some or all of the same results?
Defend your position with examples of
actual retail chains and stores you know.

8-39
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
8-40
Supply Chain Life Cycle

8-41
Electronic Data Interchange
EDI
One of the earliest uses of information technology
for supply chain management
The electronic exchange of business transaction
documents between supply chain trading partners
The almost complete automation of an e-
commerce supply chain process
Many transactions occur over the Internet, using
secure virtual private networks
8-42
Typical EDI Activities

8-43
Roles and Activities of SCM in Business

8-44
Planning & Execution Functions of SCM
Planning
Supply chain design
Collaborative demand and supply planning
Execution
Materials management
Collaborative manufacturing
Collaborative fulfillment
Supply chain event management
Supply chain performance management
8-45
Benefits and Challenges of SCM
Key Benefits
Faster, more accurate order processing
Reductions in inventory levels
Quicker times to market
Lower transaction and materials costs
Strategic relationships with supplier
8-46
Goals and Objectives of SCM

8-47
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
8-48
Trends in SCM

8-49
Case 4: Consequences of ERP Failure
The goal Agilent Technologies Inc. specializes
in measurement and technology
Its goal is to enable customers to speed
their time to market
Achieve volume production
Obtain high-quality precision manufacturing
Consequences of a new ERP system
One year to stabilize system
$105 million in lost revenue
$70 million in lost profits
8-50
Case 4: Consequences of ERP Failure
Lessons Learned
Disruptions can be more extensive than expected
Enterprise resource planning is very complex
ERP implementations are more than software
People, process, policies, the companys culture
should all be taken into consideration
According to Enterprise Applications Consulting
99 percent of rollout fiascoes are caused by
managements inability to spec requirements, and
the implementers inability to implement specs
8-51
Case 4: Consequences of ERP Failure
Russ Berrie and Company
First ERP implementation attempt took
three years and cost $10.3 million
Litigation is pending between Russ Berrie
and SAP
Second attempt
Uses new applications
Is being implement department by department
Uses stand-alone systems
8-52
Case Study Questions
What are the main reasons companies experience
failures in implementing ERP systems?
What are several key things companies should
do to avoid ERP systems failures?
Why do you think ERP system in particular are
often cited as examples of failures in IT systems
development, implementation, or management?