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

8.2 © 2007 by Prentice Hall STUDENT OBJECTIVES Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 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.

8.3 © 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

8.4 © 2007 by Prentice Hall Enterprise System

8.5 © 2007 by Prentice Hall Enterprise Systems What Are Enterprise Systems? Based on integrated software modules and a common central database How Enterprise Systems Work Best practices Business Value of Enterprise Systems Increase operational efficiency Support decision making and rapid responses to customer requests Include analytical tools to evaluate overall performance Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

8.6 © 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

8.7 © 2007 by Prentice Hall What is ERP? Enterprise Resource Planning ERP – Enterprise Resource Planning software –Forget about “planning” – it doesn’t do much of that –Forget about “resource” – a throw away term –REMEMBER “enterprise” The software attempts to integrate all departments and functions across a company into a single computer system Means single database A tall order!!

8.8 © 2007 by Prentice Hall How Can ERP Improve a Company’s Business Performance? How can it demonstrate value? –Best bet is through order fulfillment process It does not handle the up front selling (that’s CRM software) –Takes a customer order and provides a software roadmap for automating the different steps

8.9 © 2007 by Prentice Hall China Telecom Turns to Enterprise Resource Planning Read the Focus on Technology and then discuss the following questions: What problems did China Telecom face? How did these problems affect China Telecom’s business? How has the company chosen to solve these problems? What other solutions might the company have tried? Analyze the solution that China Telecom chose from the people, technology, and organization perspectives. Did China Telecom choose the best solution? Explain your answer. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Enterprise Systems

8.10 © 2007 by Prentice Hall What is SCM? Supply Chain Management Combination of art and science that goes into improving how a company finds the raw components it needs to make a product or service and deliver it to the customer Entire books (and courses) on this subject You’ll touch on this subject in more detail in OPIM 204, specifically how to calculate inventory levels, etc.

8.11 © 2007 by Prentice Hall Five Basic Components to SCM Plan Source Make Deliver Return –Fifth phase is sometimes called “reverse logistics”

8.12 © 2007 by Prentice Hall Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications The Supply Chain 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

8.13 © 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 and sneaker soles.

8.14 © 2007 by Prentice Hall Information and Supply Chain Management Inefficiencies cut into a company’s operating costs Just-in-time strategy Safety stock Bullwhip effect Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

8.15 © 2007 by Prentice Hall Supply Chain Management Applications Information visibility Supply chain planning systems Demand planning Supply chain execution systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

8.16 © 2007 by Prentice Hall Supply Chain Management and the Internet Intranets Extranets Demand-driven supply chains Push-based model Pull-based model Digital logistics nervous systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

8.17 © 2007 by Prentice Hall Push- Versus Pull-Based Supply Chain Models Figure 8-5 The difference between push- and pull-based models is summarized by the slogan “Make what we sell, not sell what we make.” Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Supply Chain Management Systems

8.18 © 2007 by Prentice Hall Match supply to demand Reduce inventory levels Improve delivery service Speed product time to market Use assets more effectively 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

8.19 © 2007 by Prentice Hall What is CRM? Customer Relationship Management A strategy used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them –Why do we want to do that? The idea of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers

8.20 © 2007 by Prentice Hall What Is Customer Relationship Management? Knowing the customer Touch points Single enterprise view of customers Data and analytical tools answer important questions about customers Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

8.21 © 2007 by Prentice Hall Customer Relationship Management (CRM) Figure 8-7 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

8.22 © 2007 by Prentice Hall IHOP Cooks Customer Data to Order Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Read the Focus on Technology and then discuss the following questions: What problems did IHOP face? How did they affect IHOP’s business performance? How has the company chosen to solve those problems? What alternatives were available? Analyze the people, organization, and technology dimensions of the solution. Did IHOP choose the best alternative? Explain your answer.

8.23 © 2007 by Prentice Hall Interactive Session: IHOP Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Visit IHOP’s Web site at How easy is it to get information from the Web site about the restaurant chain, its food, and the latest products IHOP is offering? How easy is it to submit feedback to IHOP through the Web site? What other feedback options does the Web site provide? What suggestions would you make to improve the Web site?

8.24 © 2007 by Prentice Hall CRM Software CRM packages are available with a wide spectrum of functions Partner relationship management (PRM) Employee relationship management (ERM) Sales force automation (SFA) Customer service Marketing Cross-selling Up-selling Bundling Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

8.25 © 2007 by Prentice Hall Operational: customer-facing applications such as sales force automation, call center and customer service support, and marketing automation Analytical: applications that analyze customer data output from operational CRM applications Based on data warehouses populated by operational CRM systems and customer touch points Customer lifetime value (CLTV) Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Operational and Analytical CRM

8.26 © 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 Churn rate Customer Relationship Management Systems Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

8.27 © 2007 by Prentice Hall Challenges and Opportunities Technology changes Business process changes Organizational changes Switching costs Data management Enterprise Applications: New Opportunities and Challenges Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

8.28 © 2007 by Prentice Hall Getting more value from enterprise applications Flexibility Integration with other systems Enterprise suites Links to customer and supplier systems Enterprise Applications: New Opportunities and Challenges Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Extending Enterprise Software