USING INFORMATION SYSTEMS FOR BUSINESS INTEGRATION

LEARNING GOALS  Describe the need for business integration.  Explain how organizations can use information systems to integrate supply chains.  Describe how enterprise resource planning systems integrate internal business processes.  Describe how businesses can use customer relationship management systems to improve the customer experience.  Explain the risks involved in implementing integrated systems and how they can be overcome.  Discuss the problems associated with integrating information systems on a global basis.

Business Process Integration  Many business processes have their own computer systems and do not share data in a timely and effective manner.  Even enterprise systems need to be coordinated Supply chain management (SCM) – provide a direct electronic connection with suppliers Enterprise resource planning (ERP) – integrate all the internal processes through a common information system Customer relationship management (CRM) – information system to manage all the functions that deal with customers Ensure that SCM, ERP, and CRM have the right hardware, databases, and networks

Supply Chain Management (SCM)  Stages of SCM Planning – develop and implement processes that attempt to forecast demand for products and services Sourcing – determine who should supply the items required Production – make the product  Schedule production  Ensure raw materials are on hand when needed Product delivery (logistics)  Everything from receiving a customer inquiry to invoicing  Warehouse management is one very important factor Returns – returns of raw materials as well as finished goods

Electronic Data Interchange (EDI)  The direct computer-to-computer transfer of business documents in electronic form Eliminates paperwork Reduces errors Speeds supply process  A key aspect of supply chain management  Allows companies to streamline their operations by sharing more data with companies in their supply chain  EDI relies on a pair of standards ANSI X12 – used in North America EDIFACT – international, but widely used in Europe

The Need for Internal Communications  For SCM to work, internal processes must work  Heavy requirement for internal communications

Integrating Internal Processes with ERP  ERP systems integrate all the functions and departments within an organization through a common information system  Most common modules for an ERP system Finance Manufacturing Human resources Procurement Customer relationship management  ERP software can be customized to keep critical business processes

Factors in ERP System Success  Active support of upper management  Having the best people on the implementation team  Limiting customization  Managing the time line well  Soliciting user involvement

Integrating with CRM  80/20 rule 80/20 rule  CRM system manages all the ways an organization interacts with customers  Goal of CRM is to increase sales and repeat business by learning the customer Remember the customer’s needs and preferences Determine the customer’s satisfaction with service Determine which customers are in the magic 20 percent (or have the potential to become part of it)

Integrating with CRM  Although IT is a core piece of an overall CRM strategy, it should not be the only piece.  CRM software modules include Personalization Marketing automation Sales force automation Service and support

CRM Module Functions  Personalization One-to-one marketing through personalized products and services Amazon.com  Marketing automation Determine market segments Planning and implementing campaigns Analyzing results Segment customers  Demographics  Past purchases  Preferred method of shopping

CRM Module Functions (continued)  Sales force automation Managing contacts and leads by storing customers’ basic demographic data Provide to-do lists and calendars Recognize early customer trends Forecasts of future sales  Service and support After-sales support Complaint resolution Returns

Implementing Integrated Systems  Cost varies Which modules are selected How much customization is required Average cost is $15M Payback period of 31 months  Application Service Providers (ASPs) Leases expensive resources to company on a per user or per month basis ASPs help reduce the risk of projects such as ERP and CRM

Global Integration  A global information system spans more than one country  Challenges of global systems Technical standards – e.g. from country to country, vast differences may exist in information technology infrastructure Legal issues – e.g. laws that limit what data can transfer across international borders Financial and accounting standards – e.g. handle local standards and report to HQ in a different format Cultural differences – e.g. how do customers like to pay for goods – credit card, check, cash, other