1. 8.1 © 2007 by Prentice Hall 8 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

2. 8.2 © 2007 by Prentice Hall Agenda Enterprise applications What are Enterprise systems or ERP? What is SAP? SAP Basics SCM CRM

3. 8.3 © 2007 by Prentice Hall STUDENT OBJECTIVES Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise application Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm. Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers.

4. 8.4 © 2007 by Prentice Hall STUDENT OBJECTIVES Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm. Assess the challenges and new opportunities raised by enterprise applications. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

5. 8.5 © 2007 by Prentice Hall Enterprise application Enterprise systems=ERP Enterprise systems=ERP Supply chain management Supply chain management CRM CRM

6. 8.6 © 2007 by Prentice Hall Why we need enterprise systems or ERP How does a business manage all the information needs from different functional areas How does a business manage all the information needs from different functional areas Serving different managerial requirements? Serving different managerial requirements? Let’s find out. Let’s find out.

7. 8.7 © 2007 by Prentice Hall Early Automation Automation of tasks within departments Automation of tasks within departments Therefore, each dept had its own system(s) Therefore, each dept had its own system(s)  Functionality for tasks for that department only  Systems weren’t powerful enough to attempt broader range of tasks  Usually single vendor for all parts of system (e.g. IBM)  All hardware and network components  All operating system and application software Result: Generally communication between departments remained largely manual Result: Generally communication between departments remained largely manual  IS/IT was often at the mercy of single vendors Antony Upward,CGI

8. 8.8 © 2007 by Prentice Hall Problems that give rise to ERP Run a business based on information from tens of different databases and systems none of which speak to each other. Run a business based on information from tens of different databases and systems none of which speak to each other. Company I0 different product lines,produced in separate factories, don’t exchange information. Company I0 different product lines,produced in separate factories, don’t exchange information. No business can afford disjointed information systems that don’t work together to No business can afford disjointed information systems that don’t work together to produce a coherent picture of the entire organization. produce a coherent picture of the entire organization.

9. 8.9 © 2007 by Prentice Hall What Are enterprise applications Business need enterprise systems to integrate information. Business need enterprise systems to integrate information. Enterprise applications easily combine internal and external information to present a complete picture of the business. Enterprise applications easily combine internal and external information to present a complete picture of the business.

10. 8.10 © 2007 by Prentice Hall Enterprise Systems What Are Enterprise Systems? Based on integrated software modules and a common central database Integrate information from across company’s divisions, departments, key business processes in the four functional areas Updated information made available to all business processes Generate enterprise-wide data for management analyses Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

11. 8.11 © 2007 by Prentice Hall Enterprise Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Figure 8-1 Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise How Enterprise Systems Work

12. 8.12 © 2007 by Prentice Hall How enterprise system work example Place order for tire rims Place order for tire rims Verifies customers credit limit Verifies customers credit limit Schedules the shipment, identifies the best shipping route and reserves the item from inventory. Schedules the shipment, identifies the best shipping route and reserves the item from inventory. If inventory stocks insufficient to fill order, system orders from suppliers. If inventory stocks insufficient to fill order, system orders from suppliers. Sales and production forecast are immediately updated Sales and production forecast are immediately updated General ledger and cash levels are automatically updated General ledger and cash levels are automatically updated User could tap into the system to find the status of the order, at any min. User could tap into the system to find the status of the order, at any min. Management could obtain info about how business operating Management could obtain info about how business operating Generate enterprise wide data for management analyses of product cost and profitability. Generate enterprise wide data for management analyses of product cost and profitability.

13. 8.13 © 2007 by Prentice Hall Cross functional business process The Order Fulfillment Process Figure 2-1 Fulfilling a customer order involves a complex set of steps that requires the close coordination of the sales, accounting, and manufacturing functions. Business Processes and Information Systems Management Information Systems Chapter 2 Global E-Business: How Businesses Use Information Systems Close coordination of major functional groups in a firm. Require great deal of information. Information must rapidly flow within firm and business partners and delivery firm. Information system make this happen.

14. 8.14 © 2007 by Prentice Hall Enterprise software  Built around thousands of predefined business processes that reflect best practices.(Refer to next slide.)  Companies map business processes to enterprise softwares predefined processes for desired functions  System software can be rewritten in part, but may degrade performance and process integration  For maximum benefit company must change its working to business processes in software.

15. 8.15 © 2007 by Prentice Hall Business processes supported by enterprise systems  Financial and accounting: General ledger, accounts payable, cost-center accounting, financial reporting, etc.  Human resources: Personnel administration, benefits accounting, time management, compensation, etc.  Manufacturing and production: Procurement, inventory management, purchasing, shipping, quality control, etc.  Sales and marketing: Order processing, quotations, product configuration, billing, credit checking, sales planning, etc.

16. 8.16 © 2007 by Prentice Hall Business Value of Enterprise Systems Increase operational efficiency Increase operational efficiency Support decision making and rapid responses to requests Support decision making and rapid responses to requests Include analytical tools to evaluate overall performance Include analytical tools to evaluate overall performance Respond rapidly to customer request for information or products. Respond rapidly to customer request for information or products. Enforcing standard practices and data throughout company Enforcing standard practices and data throughout company Providing firm-wide information to help managers make better decisions Providing firm-wide information to help managers make better decisions

17. 8.17 © 2007 by Prentice Hall Business Value of Enterprise Systems Allowing senior management to easily find out at any moment how a particular organizational unit is performing Allowing senior management to easily find out at any moment how a particular organizational unit is performing Determine which products are most or least profitable Determine which products are most or least profitable For e.g. Coca cola uses enterprise systems to standardize and coordinate important business processes in 200 countries. For e.g. Coca cola uses enterprise systems to standardize and coordinate important business processes in 200 countries. Colgate palmolive uses Sap R/3 ERP system. Colgate palmolive uses Sap R/3 ERP system.

18. 8.18 © 2007 by Prentice Hall ERP software Vendors Over 100 vendors globally Over 100 vendors globally 5 major vendors 5 major vendors SAP:German, pioneer of ERP SAP:German, pioneer of ERP – Oracle(acquired PeopleSoft) – Microsoft – Different versions are available for small businesses to large firms.

19. 8.19 © 2007 by Prentice Hall SAP As the world's leading provider of business software As the world's leading provider of business software SAP (which stands for "Systems, Applications, and Products in Data Processing") SAP (which stands for "Systems, Applications, and Products in Data Processing") Delivers products and services that help accelerate business innovation for our customers. Delivers products and services that help accelerate business innovation for our customers. Offers enterprise software and supply chain modules and CRM solutions. Offers enterprise software and supply chain modules and CRM solutions.

20. 8.20 © 2007 by Prentice Hall SAP in Pakistan National Foods, MCB Bank, Tetra pak, Nestle Pakistan, Coca Cola, Punjab Beverages, Barclays Bank, Shell, PSO, ICI,Service. National Foods, MCB Bank, Tetra pak, Nestle Pakistan, Coca Cola, Punjab Beverages, Barclays Bank, Shell, PSO, ICI,Service.

21. 8.21 © 2007 by Prentice Hall Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Definition and and components A network of organizations and processes for procuring raw materials, transforming them into products, and distributing the products Upstream supply chain: firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them Downstream supply chain: organizations and processes responsible for delivering products to customers Supply Chain Management Systems

22. 8.22 © 2007 by Prentice Hall Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Nike’s Supply Chain Supply Chain Management Systems Figure 8-2 This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers(tier1) and sneaker soles,uppers(tier2),supplier to these suppliers(tier3).

23. 8.23 © 2007 by Prentice Hall Supply Chain Management Systems Information and supply chain management Supply chain inefficiencies E.g. parts shortages, excessive inventory Waste up to 25% of operating costs Caused by inaccurate or untimely information Uncertain product demand Late shipments from suppliers Defective parts and raw materials To deal with these Safety stock: Kept as buffer for lack of flexibility in supply chain adds to costs Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

24. 8.24 © 2007 by Prentice Hall Supply Chain Management Systems Information and supply chain management Bullwhip effect Demand for product gets distorted as it is estimated by successive members in supply chain, causing excess stockpiling of inventory, warehousing, shipping costs Just-in-time strategy Perfect information about supply and demand so that components arrive at moment they are needed and finished goods are shipped as they leave assembly line Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

25. 8.25 © 2007 by Prentice Hall The Bullwhip Effect Figure 9-3 Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers. Supply Chain Management Systems Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

26. 8.26 © 2007 by Prentice Hall Supply chain management applications Supply chain software is classified Plan their supply chain(Supply chain planning) Execute their supply chain(Supply chain execution) Supply chain planning systems Enable a firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product. Supply chain execution systems Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.

27. 8.27 © 2007 by Prentice Hall Supply Chain Management Systems Automate the flow of information among members of the supply chain Automate the flow of information among members of the supply chain Follow a pull based model eg Walmart and DELL. Follow a pull based model eg Walmart and DELL. Help make better decisions about when and how much to purchase,produce or ship. Help make better decisions about when and how much to purchase,produce or ship. Minimize inventory levels and expedite deliveries to customers Minimize inventory levels and expedite deliveries to customers

28. 8.28 © 2007 by Prentice Hall INTRANET AND EXTRANETS FOR SUPPLY CHAIN MANAGEMENT Companies are reengineering supply chain, aided by internet technologies and supply chain management software. Companies are reengineering supply chain, aided by internet technologies and supply chain management software. Firms use intranets to improve coordination among their internal supply chain processes, Firms use intranets to improve coordination among their internal supply chain processes, and they can use extranets to coordinate supply chain processes shared with their business partners. Using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules. and they can use extranets to coordinate supply chain processes shared with their business partners. Using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules.

29. 8.29 © 2007 by Prentice Hall i2 technologies and SAP supply chain management i2 technolgies are supply chain management software vendor SAP Supply Chain Management (SAP SCM) enables collaboration, planning, execution, and coordination of the entire supply network,

30. 8.30 © 2007 by Prentice Hall Streamline both internal and external supply chain process Match supply to demand Reduce inventory levels Improve delivery service Speed product time to market Reduced supply chain costs lead to increased profitability Increased sales Business Value of Supply Chain Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

31. 8.31 © 2007 by Prentice Hall What Is Customer Relationship Management? Capture, consolidate, analyze customer data and distribute results to various systems and customer touch points (contact points) across enterprise Provide single enterprise view of customers Provide analytical tools for determining value, loyalty, profitability of customers Assist in acquiring new customers, providing better service and support to customers, customize offerings to customer preferences, provide ongoing value to retain profitable customers Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

32. 8.32 © 2007 by Prentice Hall Customer Relationship Management (CRM) CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Customer Relationship Management Systems

33. 8.33 © 2007 by Prentice Hall CRM Software CRM packages are available with a wide spectrum of functions Typically include tools for sales, customer service, and marketing Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

34. 8.34 © 2007 by Prentice Hall Customer Relationship Management Systems Sales force automation (SFA) modules Help sales staff increase productivity by focusing efforts on most profitable customers Provide sales prospect and contact information, product information, product configuration capabilities, and sales quote generation capabilities Customer service modules Provide info to Improves efficiency of call centers, help desks etc. Assigning and managing customer service requests E.g. managing advice phone lines, Web site support Handle more calls give better service. CRM systems include webbased self service capabilities. Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

35. 8.35 © 2007 by Prentice Hall Customer Relationship Management Systems Marketing modules Aid in marketing campaigns by capturing prospect and customer data, Providing product and service information Qualifying leads for targeted marketing Scheduling and tracking direct-marketing mailings or e-mail Analyzing marketing and customer data: Identifying profitable and unprofitable customers Designing products and services to satisfy specific customer needs and interests Identifying opportunities for cross-selling Management Information Systems Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

36. 8.36 © 2007 by Prentice Hall CRM Application Vendors Enterprise software vendors like SAP Oracle people soft Sales force.com

37. 8.37 © 2007 by Prentice Hall Business Value of Customer Relationship Management Business benefits: Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition/retention Increased sales revenue By identifying profitable customers and segments for focused marketing and cross-selling Reduced churn rate (number of customers who stop using or purchasing products or services) Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

38. 8.38 © 2007 by Prentice Hall Challenges posed by enterprise application Enterprise systems are expensive and difficult to implement. Enterprise systems are expensive and difficult to implement. Require extensive organizational change Require extensive organizational change Large new software investment Large new software investment If implemented atop flawed processes they cant provide value. If implemented atop flawed processes they cant provide value. Employees require proper training Employees require proper training

39. 8.39 © 2007 by Prentice Hall EXAMPLES OF enterprise application EXAMPLES OF enterprise application SAP business suite BASED ON SERVICE ORIENTED ARCHITECTURE) SAP business suite BASED ON SERVICE ORIENTED ARCHITECTURE) Oracle e business suite Oracle e business suite Microsoft dynamics suite Microsoft dynamics suite