USING INFORMATION SYSTEMS FOR BUSINESS INTEGRATION Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. 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. Copyright © 2005 Prentice Hall, Inc.

Business Integration at the Bead Bar Expansion and growth generate increased need for integration. Finance Sales Purchasing Meredith – Needs an overall view of the business Suzanne – Needs help managing the increased complexity of additional studios’ personnel, budgets, and inventory Leda – Needs to improve interaction with franchises Mitch – Needs to manage more sales people entering new markets Julia – Needs increased functionality in the financial software Miriam – Wants to know information systems can be used to keep in better contact with their increasing customer base. Copyright © 2005 Prentice Hall, Inc.

Business Integration at the Bead Bar (continued) Rachel – E-business and growth of locations means increased need to manage inventories and order fulfillment Jim – Growth means we need a better way to handle job candidates, employee benefits, and employee reviews Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

The Need for Internal Communications For SCM to work, internal processes must work Heavy requirement for internal communications Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. Integrating with CRM 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) Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. 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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. 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 Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. 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 Copyright © 2005 Prentice Hall, Inc.

Copyright © 2005 Prentice Hall, Inc. Bead Bar Consultant How Integration Issues Affect the Bead Bar Meredith – Cost versus functionality of ERP systems Suzanne – Should it be ERP? Or CRM? Both have advantages and disadvantages Leda – Likes vertical market integration to ensure franchisees so not purchase supplies elsewhere Mitch – Sales force automation would greatly improve management of the sales force Julia – SCM helps to reduce inventory costs whereas ERP financials would produce financial statements more quickly Copyright © 2005 Prentice Hall, Inc.

Bead Bar Consultant (continued) Miriam – Wants CRM to manage marketing campaigns Rachel – SCM or ERP procurement module to manage inventory and costs Jim – ERP human resources module would improve management of HR processes Copyright © 2005 Prentice Hall, Inc.

Learning Goals Summary In this chapter you have learned: The need for business integration How organizations can use information systems to integrate supply chains How enterprise resource planning systems integrate internal business processes How businesses can use customer relationship management systems to improve the customer experience The risks involved in implementing integrated systems and how they can be overcome The problems associated with integrating information systems on a global basis Copyright © 2005 Prentice Hall, Inc.