1. USING INFORMATION SYSTEMS FOR BUSINESS INTEGRATION
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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.
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3. 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.
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4. 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
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5. 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
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8. 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
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9. 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
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10. The Need for Internal Communications
For SCM to work, internal processes must work
Heavy requirement for internal communications
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12. 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
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14. 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
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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)
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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
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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
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18. 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
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19. 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
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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
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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
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22. 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
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23. 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
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