1. Information Systems Today: Managing in the Digital World8
COIS WEEK 8
Chapter
Building Organizational Partnerships Using Enterprise Information Systems
“If the Internet turns out not to be the future of computing, we’re toast.”
Larry Ellison, Founder and CEO, Oracle Corporation
Information Systems Today: Managing in the Digital World

2. Information Systems Today: Managing in the Digital World
Learning Objectives
Information Systems Today: Managing in the Digital World

3. Information Systems Today: Managing in the Digital World
Learning Objectives
Information Systems Today: Managing in the Digital World

4. Information Systems Today: Managing in the Digital World
Enterprise Systems
Problem:
Information systems growing over time
Lack of integration
Different computing platforms
Difficult to integrate
Data must be reentered from one system to another
Same pieces of data stored in several versions
Information Systems Today: Managing in the Digital World

5. Legacy System Approach
Information Systems Today: Managing in the Digital World

6. Enterprise System Approach
Information Systems Today: Managing in the Digital World

7. Supporting Business Activities
Internally focused systems
Support functional areas, business processes and decision-making within an organization
New information (value) is added at every step
Information Systems Today: Managing in the Digital World

8. Externally Focused Systems
Coordinate business activities with customers, suppliers, business partners and others who operate outside the organization
Interorganizational systems
Streamline the flow of information between companies
Information Systems Today: Managing in the Digital World

9. Internally Focused Systems: Value Chain
Flow of information through a set of business activities
Core activities – functional areas that process inputs and produce outputs
Support activities – enable core activities to take place
Information Systems Today: Managing in the Digital World

10. Information Systems Today: Managing in the Digital World
Core Activities
Inbound logistics activities
Receiving and stocking raw materials, parts and products
Cisco – delivery of electronic components from suppliers
Operations and manufacturing activities
Order processing and/or manufacturing of end products
Dell – component parts assembled to make products
Outbound logistics activities
Distribution of end products
Amazon.com – delivery of books to customers
Information Systems Today: Managing in the Digital World

11. Information Systems Today: Managing in the Digital World
Core Activities (II)
Marketing and Sales activities
Presale marketing activities (e.g., creating marketing brochures)
Amtrak – use of IS to update prices and schedules
Customer service activities
Postsale activities
HP – downloads related to purchased products
Information Systems Today: Managing in the Digital World

12. Information Systems Today: Managing in the Digital World
Support Activities
Administrative activities
Support of day-to-day operations (for all functional areas)
Infrastructure activities
Implement hardware and software needed
Human resource activities
Employee management
Technology development activities
Design and development of applications to support the primary activities
Procurement activities
Purchasing of goods and services (inputs into the primary activities)
Information Systems Today: Managing in the Digital World

13. Externally Focused Applications – Value System
Coordination of multiple value chains
Information Systems Today: Managing in the Digital World

14. Externally Focused Applications – Value System
Information Flows in a Value System
Upstream information flow – information received from another company
Downstream information flow – information produced by the company and sent to another organization
Information Systems Today: Managing in the Digital World

15. How Enterprise Systems evolved
Start with packaged applications:
Written by third-party vendors
Used by many different organizations
Useful for standardized, repetitive tasks
Cost effective
E.g., Microsoft Money and Quicken, suitable for individual, stand-alone use
Information Systems Today: Managing in the Digital World

16. How Enterprise Systems evolved cont.
Packaged applications are limited
Hence custom applications:
Developed exclusively for a specific organization
Designed for particular business needs
Higher development costs
Information Systems Today: Managing in the Digital World

17. Evolution of Enterprise Systems
Packaged & Custom applications:
Organizations start with stand-alone applications
Legacy systems
Information Systems Today: Managing in the Digital World

18. Legacy Systems lack integration
Each department has its own system
Infrastructure specific
Inefficient processes
Potential for inaccuracies
Information Systems Today: Managing in the Digital World

19. The Need for Integrated Enterprise Systems (ES’s)
Advantages of integrated systems
Centralized point of access
Conversion needed
Enterprise Resource Planning (ERP) vendors offer different modules
Components that can be selectively implemented
E.g., modules of mySAP business suite
Information Systems Today: Managing in the Digital World

20. Vanilla Versus Customized ES’s
Vanilla version
Modules the version comes with out of the box
Certain processes might not be supported
Customization
Additional software or changes to vanilla version
Always needs to be updated with new versions of vanilla
Information Systems Today: Managing in the Digital World

21. Best Practices-Based Software
Most ERP vendors build best practices into their ERP systems
Identify business processes in need of change
Future updates are smoother if businesses change their business processes to fit with ERP systems
Is following best practices always the best strategy?
If companies have competitive advantage from unique business processes
Information Systems Today: Managing in the Digital World

22. Information Systems Today: Managing in the Digital World
Learning Objectives
WE NOW LOOK AT ERP, CRM & SCM IN MORE DETAIL
Information Systems Today: Managing in the Digital World

23. Enterprise Resource Planning
Data warehouse
Large, centralized data repository
Single place for data storage and access
Information Systems Today: Managing in the Digital World

24. Information Systems Today: Managing in the Digital World
Choosing an ERP System
Control
Centralized control vs. control within specific business units
Level of detail provided to management
Consistency of policies and procedures
Business requirements
Selection of modules
Core and extended components
Information Systems Today: Managing in the Digital World

25. Core and Extended ERP Components
Core components – support primary internal activities
Extended components – support primary external activities
Information Systems Today: Managing in the Digital World

26. Information Systems Today: Managing in the Digital World
ERP Limitations
ERP falls short in communicating across organizational boundaries
Not well suited for managing value system activities
Other systems can work with ERP to provide these capabilities
Information Systems Today: Managing in the Digital World

27. Information Systems Today: Managing in the Digital World
Learning Objectives
Information Systems Today: Managing in the Digital World

28. Customer Relationship Management
Information Systems Today: Managing in the Digital World

29. Customer Relationship Management
Web has changed the business
Customers have the power
Transactions vs. relationships
Keeping customers satisfied is key
CRM
Corporate-level strategy
Concentrates on the downstream information flow
To attract potential customers
Creation of customer loyalty
Managers need to be able to monitor and analyze factors driving customer satisfaction
Information Systems Today: Managing in the Digital World

30. Information Systems Today: Managing in the Digital World
Key Benefits of CRM
Enables 24/7/365 operations
Individualized service
Improved information
Speeds up problem identification/resolution
Speeds up processes
Improved integration
Improved product development
Improved planning
Information Systems Today: Managing in the Digital World

31. Developing a CRM Strategy
More than just software purchase and installation
Enterprise-wide changes
Information Systems Today: Managing in the Digital World

32. Policy and Business Process Changes
Policies and procedures need to reflect customer-focused culture
Information Systems Today: Managing in the Digital World

33. Customer Service Changes
Customer-focused measures of quality
Process changes to enhance customer experience
Information Systems Today: Managing in the Digital World

34. Employee Training Changes
Employees from all business areas must value customer service and satisfaction
Information Systems Today: Managing in the Digital World

35. Data Collection, Analysis and Sharing Changes
All aspects of customer experience must be tracked, analyzed and shared
Consider ethical concerns
Information Systems Today: Managing in the Digital World

36. Information Systems Today: Managing in the Digital World
Architecture of a CRM
Information Systems Today: Managing in the Digital World

37. Information Systems Today: Managing in the Digital World
Operational CRM
Systems for customer interaction and service
Personalized and efficient customer service
Access to complete information about customer
Information Systems Today: Managing in the Digital World

38. Sales Force Automation
Component of operational CRM
Primary goals
Identification of potential customers
Streamlining of selling processes
Improvement of managerial information
Information Systems Today: Managing in the Digital World

39. Sales Force Automation
Supports day-to-day sales activities
Order processing and tracking
Contact development, assignment and management
Customer history preferences
Sales forecasting and performance analysis
Sales administration
Information Systems Today: Managing in the Digital World

40. Advantages of Sales Force Management Systems for Sales Personnel
Information Systems Today: Managing in the Digital World

41. Advantages of Sales Force Management Systems for Sales Managers
Information Systems Today: Managing in the Digital World

42. Examples of Sales Measures Tracked by SFA
Revenue per sales person, per territory, or as a percentage of sales quota
Margins by product category, customer segment, or customer
Number of calls per day, time spent per contract, revenue per call, cost per call, ratio of orders to calls
Number of lost customers per period or cost of customer acquisition
Information Systems Today: Managing in the Digital World

43. SFA Provides Improved Understanding of Market Conditions
Improved understanding of markets, segments and customers
Improved understanding of competitors
Enhanced understanding of organization’s strengths and weaknesses
Better understanding of economic structure of the industry
Enhanced product development
Improved strategy development and coordination with the sales function
Information Systems Today: Managing in the Digital World

44. Customer Service and Support
Second component of operational CRM
Automation of traditional “help desk” services
Customer interaction center (CIC)
Multiple communication channels
Customer service anytime, anywhere through any communication channel
Low support cost
Information Systems Today: Managing in the Digital World

45. Enterprise Marketing Automation
Third component of an operational CRM
Comprehensive view of the competitive environment
Common factors tracked by EMS
Economic
Governmental and public policy
Technology and infrastructure
Ecology
Cultural
Suppliers
Information Systems Today: Managing in the Digital World

46. Information Systems Today: Managing in the Digital World
Analytical CRM
Analysis of customer behavior and perceptions
Customized marketing
Up-selling
Retaining customers
Key technologies used to create predictive models
Data mining
Decision support systems
Continuous data collection and analysis is necessary
Information Systems Today: Managing in the Digital World

47. Customer Focused Business Processes Addressed by Analytical CRM
Marketing campaign management and analysis
Customer campaign customization
Customer communication optimization
Customer segmentation and sales coverage optimization
Pricing optimization and risk assessment and management
Information Systems Today: Managing in the Digital World

48. Customer Focused Business Processes Addressed by Analytical CRM cont.
Price, quality and satisfaction analysis of competitors
Customer acquisition and retention analysis
Customer satisfaction and management
Product usage, life cycle analysis, and product development
Product and service quality tracking and management
Information Systems Today: Managing in the Digital World

49. Information Systems Today: Managing in the Digital World
Collaborative CRM
Effective communication with the customer from the entire organization
CIC is the key
Collaborative CRM enhances communication
Greater customer focus
Understanding of historical and current needs
Lower communication barriers
Communication preferences of the customer considered
Increased information integration
Customer information shared across the organization
Information Systems Today: Managing in the Digital World

50. Ethical Concerns with CRM
Can personalization get too personal?
Information Systems Today: Managing in the Digital World

51. Information Systems Today: Managing in the Digital World
Learning Objectives
Information Systems Today: Managing in the Digital World

52. Supply Chain Management
Upstream activities
Improvement of business processes spanning organizational boundaries
Adopted by large organizations
Collaboration with suppliers (supply network)
Ability to compete more effectively in the market place
Cost reduction
Increased responsiveness to market demands
Focus on upstream information flows
Acceleration of product development
Reduction of costs of raw materials procurement
Information Systems Today: Managing in the Digital World

53. Information Systems Today: Managing in the Digital World
Supply Network
Information Systems Today: Managing in the Digital World

54. Functions That Optimize the Supply Network (SCM Modules)
Supply chain collaboration
Collaborative design
Collaborative fulfillment
Collaborative demand and supply planning
Collaborative procurement
Production planning
Supply chain event management
Supply chain exchange
Supply chain performance management
Information Systems Today: Managing in the Digital World

55. Information Systems Today: Managing in the Digital World
SCM architecture
SCM modules support two functions
Supply chain planning - development of resource plans to support production
Supply chain execution - execution of supply chain planning
EXPLAIN HOW TO READ THESE DIAGRAMS
Information Systems Today: Managing in the Digital World

56. Information Systems Today: Managing in the Digital World
Supply Chain Planning
Four types of plans are developed
Demand planning and forecasting
Examination of historic data
Distribution planning
Delivering products to consumers
Warehousing, delivering, invoicing and payment collection
Production scheduling
Coordination of activities needed to create the product/service
Optimization of the use of materials, equipment and labor
Procurement planning
Development of inventory estimates
Information Systems Today: Managing in the Digital World

57. Supply Chain Execution
Management of three key elements
Product flow
Flow of product from supplier to consumer
Automation of product returns
Information flow
Complete removal of paper documents
Access to current information at all times
Financial flow
Automatic flow of payments
Information Systems Today: Managing in the Digital World

58. Developing an SCM Strategy
SCM efficiency and effectiveness need to be balanced
Efficiency – cost minimization
Effectiveness – customer service maximization
Information Systems Today: Managing in the Digital World

59. Information Systems Today: Managing in the Digital World
Emerging SCM Trends
Enterprise portals – B2B marketplace
Access point to proprietary information
Productivity gains and cost savings
Distribution portals
Products from single supplier to many buyers
Procurement portals
Procurement of products between single buyer and multiple suppliers
Information Systems Today: Managing in the Digital World

60. Example: Distribution Portal
Automation of business processes between supplier and multiple customers
Before transaction
During transaction
After transaction
Trading exchanges
Equilibrium between buyers and sellers
Vertical markets
Information Systems Today: Managing in the Digital World

61. Example: Procurement Portal
Automation of business processes between a buyer and multiple suppliers
Information Systems Today: Managing in the Digital World

62. Information Systems Today: Managing in the Digital World
Trading Exchanges
Small companies don’t have funds for SCM
Trading exchanges provide a solution
Operated by third-party vendors
Revenue model
Commission for each transaction
Usage and association fees
Advertising
Many buyers and many sellers can come together
Popular trading exchanges
(steel)
(paper)
(medical equipment)
Information Systems Today: Managing in the Digital World

63. Key Technologies for Enhancing SCM
Extensible Markup Language (XML)
Specifies rules for tagging elements
Specifies how information should be interpreted and used
Customizable
XML variations
Extensible Business Reporting Language (XBRL)
Publishing of financial information
Information Systems Today: Managing in the Digital World

64. Radio Frequency Identification
Replacement for standard bar codes
Transceiver and antenna
Diverse usage opportunities
Line-of-sight reading not necessary
RFID tags can contain more information than bar codes
Scanning can be done from greater distance
Passive tags – range of few feet
Active tags – hundreds of feet
Information Systems Today: Managing in the Digital World

65. Use of RFID in Supply Chain Management
Pallet of inventory processed through an RFID gate
Information Systems Today: Managing in the Digital World

66. Information Systems Today: Managing in the Digital World
Learning Objectives
Information Systems Today: Managing in the Digital World

67. The Formula for Enterprise System Success
Secure executive sponsorship
Most failures due to lack of top-level management support
Get help from outside experts
Consultants are specifically trained
Implementation tends to happen faster
Thoroughly train users
Most overlooked, underestimated and poorly budgeted expense
Training can prevent dissatisfaction
Take a multidisciplinary approach to implementations
Include end users from all functional areas in the implementation
Information Systems Today: Managing in the Digital World

68. End of Chapter Content
OPTIONAL: DISCUSS OR SHOW THE FOLLOWING SLIDES IF TIME PERMITS

69. Opening Case: CRM and Major League Baseball
Major League Baseball Advanced Media (MLBAM)
Services MLB.com (since 2001)
Focus on the customer
Services
Team merchandise
Live audio and video
1 million subscribers
$12-16 million revenue/year
Fantasy baseball
Mobile content for cell phones
Game tickets for all 30 MLB teams
All services very successful
Information Systems Today: Managing in the Digital World

70. Outsourcing Your McDonald’s Order
McDonald’s – One of America’s success stories
Founded in 1948 in San Bernardino, California
$20 billion business
31,000 locations
Outsourcing the drive-through
All stores already had an
Internet connection
Orders processed overseas
Entered into the queuing system
Food quality remains the same
Information Systems Today: Managing in the Digital World

71. Larry Ellison, Founder and CEO, Oracle Corporation
Referred to as “the other software billionaire”
Oracle second to Microsoft in software sales
“If the Internet turns out not to be the future of computing, we’re toast,”
Ellison said early in his career
Information Systems Today: Managing in the Digital World

72. Information Systems Today: Managing in the Digital World
Misusing CRM Data
2000
10,000 pounds of meat potentially infected with mad cow disease distributed in Washington State
QFC grocery chain sued for not informing customers of a recall
2004
Albertsons’ misused CRM data
Pharmaceutical companies paid Albertson’s to ask their customers to switch to more expensive drugs
Privacy Rights Clearinghouse sued Albertsons
Information Systems Today: Managing in the Digital World

73. Targeting or Discriminating? Ethical Pitfalls of CRM
CRM can be called a marketer’s dream
Getting to know customers
Maximizing the benefits gained from customers
Customer segmentation
Target marketing
Companies need to develop ethical principles of CRM use
Establish how data will be used
Inform customers about the use of data
Refrain from stepping over the ethical/unethical line
Information Systems Today: Managing in the Digital World

74. Three-Dimensional Fabrication
Fabbing – three-dimensional (3D) printing
2 printer heads
First lays down a fine powder
Second head is a gluing agent
With each pass of the heads one layer of the model is done
Prototype made in hours vs. days
Fast production of prototypes that are
3-D
Usable
With moving parts
Hewlett-Packard (HP) – leader
3-D HP printers now available for $1,000
Information Systems Today: Managing in the Digital World

75. Information Systems Today: Managing in the Digital World
RFID on the Rise
Market for RFID is exploding
Expected growth from $2.7 billion (2006) to $12.3 billion (2010)
Supply chain elements will account for majority of the growth
Information Systems Today: Managing in the Digital World

76. The Comics Industry: Digital Distribution to the Rescue
1998 – Marvel Comics goes bankrupt
The largest player in the industry
Creator of 5,000 comic book characters
Other smaller companies were no longer in business
Transition to big screen and digital media saved the comics
Marvel.com
30 older comics online
82% of users also buy in the stores
Japanese companies deliver comics to cell phones
$400 million yearly revenues
Information Systems Today: Managing in the Digital World