2Enterprise Business Systems Chapter 8Enterprise Business Systems
3Learning ObjectivesIdentify and give examples to illustrate the following aspects of customer relationship, enterprise research, and supply chain management systemsBusiness processes supportedCustomer and business value providedPotential challenges and trends
4Customer Relationship Management A customer-centric focusCustomer relationships have become a company’s most valued assetEvery company’s strategy should be to find and retain the most profitable customers possible
5Case 1: Business Benefits of CRM Forex Capital Markets trades $20 billion worth of currency per month12,000 clients in 70 countriesTracking sales leads and prospectsBegan with Excel spreadsheetsSwitched to Access databaseVolume forced move to CRM systemAccess controlled through data security and information sharing privileges
6Case 1: Business Benefits of CRM Wyse TechnologyWorld leader in thin-client computingRevenues in excess of $180 millionDoubled sales within 12 months of installing CRM systemNo additional staff needed
7Case Study QuestionsWhy can’t 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?
8Case Study QuestionsSalesforce.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?
9What is CRM?Managing the full range of the customer relationship involvesProviding customer-facing employees with a single, complete view of every customer at every touch point and across all channelsProviding the customer with a single, complete view of the company and its extended channelsCRM uses IT to create a cross-functional enterprise system that integrates and automates many of the customer-serving processes
11Contact and Account Management CRM helps sales, marketing, and service professionals capture and track relevant data aboutEvery past and planned contact with prospects and customersOther business and life cycle events of customersData are captured through customer touchpointsTelephone, fax,Websites, retail stores, kiosksPersonal contact
12SalesA CRM system provides sales reps with the tools and data resources they need toSupport and manage their sales activitiesOptimize cross- and up-sellingCRM also provides the means to check on a customer’s account status and history before scheduling a sales call
13Marketing and Fulfillment CRM systems help with direct marketing campaigns by automatic such tasks asQualifying leads for targeted marketingScheduling and tracking mailingsCapturing and managing responsesAnalyzing the business value of the campaignFulfilling responses and requests
14Customer Service and Support A CRM system gives service reps real-time access to the same database used by sales and marketingRequests for service are created, assigned, and managedCall center software routes calls to agentsHelp desk software provides service data and suggestions for solving problemsWeb-based self-service enables customers to access personalized support information
15Retention and Loyalty Programs It costs 6 times more to sell to a new customerAn unhappy customer will tell 8-10 othersBoosting customer retention by 5 percent can boost profits by 85 percentThe odds of selling to an existing customer are 50 percent; a new one 15 percentAbout 70 percent of customers will do business with the company again if a problem is quickly taken care of
16Retention and Loyalty Programs Enhancing and optimizing customer retention and loyalty is a primary objective of CRMIdentify, reward, and market to the most loyal and profitable customersEvaluate targeted marketing and relationship programs
18Benefits of CRM Benefits of CRM Identify and target the best customers Real-time customization and personalization of products and servicesTrack when and how a customer contacts the companyProvide a consistent customer experienceProvide superior service and support across all customer contact points
19CRM Failures Business benefits of CRM are not guaranteed 50 percent of CRM projects did not produce promised results20 percent damaged customer relationshipsReasons for failureLack of understanding and preparationNot solving business process problems firstNo participation on part of business stakeholders involved
20Trends in CRM Operational CRM Supports customer interaction with greater convenience through a variety of channelsSynchronizes customer interactions consistently across all channelsMakes the company easier to do business with
21Trends in CRM Analytical CRM Extracts in-depth customer history, preferences, and profitability from databasesAllows prediction of customer value and behaviorAllows forecast of demandHelps tailor information and offers to customer needs
22Trends in CRM Collaborative CRM Easy collaboration with customers, suppliers, and partnersImproves efficiency and integration throughout supply chainGreater responsiveness to customer needs through outside sourcing of products and services
23Trends in CRM Portal-based CRM Provides users with tools and information that fit their needsEmpowers employees to respond to customer demands more quicklyHelps reps become truly customer-facedProvides instant access to all internal and external customer information
24ERP: The Business Backbone ERP is a cross-functional enterprise backbone that integrates and automates processes withinManufacturingLogisticsDistributionAccountingFinanceHuman resources
25Case 2: Business Value of ERP Autosystems produces headlamps for major automobile manufacturersUntil a few years ago, the manufacturing process was managed with paper documentsAn ERP system was installed, but did not extend to the shop floorSignificant research was done before deciding to add the shop floor reporting module
26Case 2: Business Value of ERP Installing PCs and ERP software on the shop floor allows Autosystems toEnter timely, accurate informationPlan more efficientlyMake production changes in order to avoid labor or scrap problemsDiscuss these issues with employees while they are still current and meaningful
27Case Study QuestionsWhy 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?
28What is ERP?Enterprise resource planning is a cross-functional enterprise systemAn integrated suite of software modulesSupports basic internal business processesFacilitates business, supplier, and customer information flows
31Benefits and Challenges of ERP ERP Business BenefitsQuality and efficiencyDecreased costsDecision supportEnterprise agilityERP CostsRisks and costs are considerableHardware and software are a small part of total costsFailure can cripple or kill a business
33Causes of ERP Failures Most common causes of ERP failure Under-estimating the complexity of planning, development, trainingFailure to involve affected employees in planning and developmentTrying to do too much too fastInsufficient trainingInsufficient data conversion and testingOver-reliance on ERP vendor or consultants
35Supply Chain Management (SCM) Fundamentally, supply chain management helps a companyGet the right productsTo the right placeAt the right timeIn the proper quantityAt an acceptable cost
36Goals of SCM The goal of SCM is to efficiently Forecast demand Control inventoryEnhance relationships with customers, suppliers, distributors, and othersReceive feedback on the status of every link in the supply chain
37Case 3: Applying Lean Logistics to SCM The Tesco supermarket chain is a pioneer in retailingUsed SCM to overcome disadvantage of weak supplier leverage and expensive logisticsChanged product distribution methods to reduce labor costs and inventory levelsGot suppliers to ship in smaller quantities, preconfigured for sales displayReduced total product “touches” from 150 to 50Reduced throughput time from 20 days to 5
38Case Study QuestionsWhat key insights of Tesco’s SCM direction Graham Booth helped revolutionize Tesco’s 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?
39Case Study QuestionsWhat 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.
40What is a Supply Chain? The interrelationships With suppliers, customers, distributors, and other businessesNeeded to design, build, and sell a productEach supply chain process should add value to the products or services a company producesFrequently called a value chain
42Electronic Data Interchange EDIOne of the earliest uses of information technology for supply chain managementThe electronic exchange of business transaction documents between supply chain trading partnersThe almost complete automation of an e-commerce supply chain processMany transactions occur over the Internet, using secure virtual private networks
46Benefits and Challenges of SCM Key BenefitsFaster, more accurate order processingReductions in inventory levelsQuicker times to marketLower transaction and materials costsStrategic relationships with supplier
48Benefits and Challenges of SCM Key ChallengesLack of demand planning knowledge, tools, and guidelinesInaccurate data provided by other information systemsLack of collaboration among marketing, production, and inventory managementSCM tools are immature, incomplete, and hard to implement
50Case 4: Consequences of ERP Failure The goal Agilent Technologies Inc. specializes in measurement and technologyIts goal is to enable customers to speed their time to marketAchieve volume productionObtain high-quality precision manufacturingConsequences of a new ERP systemOne year to stabilize system$105 million in lost revenue$70 million in lost profits
51Case 4: Consequences of ERP Failure Lessons LearnedDisruptions can be more extensive than expectedEnterprise resource planning is very complexERP implementations are more than softwarePeople, process, policies, the company’s culture should all be taken into considerationAccording to Enterprise Applications Consulting99 percent of rollout fiascoes are caused by management’s inability to spec requirements, and the implementer’s inability to implement specs
52Case 4: Consequences of ERP Failure Russ Berrie and CompanyFirst ERP implementation attempt took three years and cost $10.3 millionLitigation is pending between Russ Berrie and SAPSecond attemptUses new applicationsIs being implement department by departmentUses stand-alone systems
53Case Study QuestionsWhat 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?