1. e-Business Systems Chapter 7 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 7-2 Learning Objectives Identify these cross-functional enterprise systems, and give examples of how they can provide business value to a company –Resource planning –Customer Relationship Management –Supply chain management –Enterprise application integration –Transaction processing systems –Enterprise collaboration systems

3. 7-3 Learning Objectives Give examples of how the Internet and other information technologies support business processes within the business functions of –Accounting –Finance –Human resource management –Marketing –Production –Operations management

4. 7-4 Learning Objectives Understand the need for enterprise application integration to improve the support of business interactions across multiple e-business applications

5. 7-5 Enterprise Business Systems E-business Using the Internet, other networks, and IT to support… Electronic commerce Enterprise communications and collaboration Web-enabled business processes E-commerce Buying, selling, and marketing of products, services, and information over the Internet and other networks

6. 7-6 Case 1: NetSuite, Berlin Packaging, Churchill Downs… CRM software helps sales and marketing professionals increase sales revenue by providing more and better services to customers and prospects CRM implementation –Often fails due to difficulty of migrating data –Is easier to do early in a company’s history Companies must ensure data are in order before launching any major CRM initiative

7. 7-7 Case Study Questions What are the business benefits of CRM implementations for organizations such as Berlin Packaging and Churchill Downs? –What other uses of CRM would you recommend to the latter? Do you agree that smaller organizations are better positioned to be more effective users of CRM than larger ones?

8. 7-8 Case Study Questions One of the main issues in the case is the importance of “good” data to the success of CRM implementations –In Chapter 5, we compared the file processing and database management approaches to data resource management Which of the problems discussed there do you see in this case? How do CRM applications attempt to address them?

9. 7-9 Cross-Functional Systems Cross-functional systems cross the boundaries of traditional business functions

10. 7-10 Enterprise Application Architecture

11. 7-11 Managing at the Enterprise Level Getting the whole business to fly in the same direction, as efficiently as possible –Customer relationships –Back-office operations –Movement of raw materials & finished goods

12. 7-12 Customer Relationship Management A customer-centric focus –Customer relationships are a company’s most valued asset –Every company should find and retain the most profitable customers possible

13. 7-13 What is CRM? Managing the full range of the customer relationship involves two related objectives (2) Providing the customer with a single, complete view of the company and its extended channels (1) Providing customer-facing employees with a single, complete view of every customer, at every touch point, across all channels CRM uses IT to create a cross functional enterprise system that integrates and automates customer-serving processes

14. 7-14 Application Clusters in CRM

15. 7-15 Contact and Account Management CRM helps sales, marketing, and service professionals capture and track relevant data about –Every past and planned contact with prospects and customers –Other customer business & life-cycle events Data are captured through touchpoints –Telephone, fax, e-mail, Websites –Retail stores, kiosks, personal contact

16. 7-16 Sales A CRM system provides sales reps with the tools and data resources they need to –Support and manage sales activities –Optimize cross- and up-selling CRM also provides the means to check on a customer’s account status and history before scheduling sales calls

17. 7-17 Marketing and Fulfillment CRM systems help with direct marketing campaigns by automating tasks Qualifying leads for targeted marketing Scheduling and tracking mailings Capturing and managing responses Analyzing the business value of a campaign Fulfilling responses & requests

18. 7-18 Customer Service and Support CRM helps customer service managers create, assign and manage customers’ requests for service –Call center software –Help desk software –Web-based self-service

19. 7-19 Retention and Loyalty Programs Boosting customer retention 5% can boost profits 85% It costs 6 times more to sell to a new customer An unhappy customer will tell 8-10 others The odds of selling to an existing customer are 50%; a new one 15% 70% of complaining customers will do business with the company again if it quickly fixes a problem

20. 7-20 Retention and Loyalty Programs Enhancing and optimizing customer retention and loyalty is a primary objective of CRM –Identify, reward, and market to the most loyal and profitable customers –Evaluate targeted marketing and relationship programs

21. 7-21 Three Phases of CRM

22. 7-22 Benefits and Challenges of CRM Real-time customization and personalization of products and services Track when and how a customer contacts the company Identify and target the best customers Provide a consistent customer experience Provide superior service and support across all customer contact points Benefits of CRM

23. 7-23 CRM Failures Business benefits of CRM are not guaranteed –50% of CRM projects did not produce promised results –20% damaged customer relationships Reasons for failure –Lack of understanding and preparation –Not solving business process problems first –No participation on part of involved business stakeholders

24. 7-24 What is ERP? Facilitates business, supplier, and customer information flows Supports basic internal business processes An integrated suite of software modules The backbone of business processes A cross-functional enterprise system

25. 7-25 ERP Application Components

26. 7-26 Benefits and Challenges of ERP ERP Business Benefits 1. Quality & efficiency 2. Decreased costs 3. Decision support 4. Enterprise agility ERP Costs 1. High risk & cost 2. Hardware and software are a small part of overall project 3. Failure can cripple or kill a business

27. 7-27 Costs of Implementing a New ERP

28. 7-28 Causes of ERP Failures Common Causes of ERP Failure Over-reliance on ERP vendor or consultants Under- estimating the complexity of planning, development, training Failure to involve affected employees in planning and development Trying to do too much, too fast Insufficient training Insufficient data conversion and testing

29. 7-29 Supply Chain Management (SCM) Supply chain management helps a company –Get the right products –To the right place –At the right time –In the proper quantity –At an acceptable cost

30. 7-30 Goals of SCM Forecast demand Enhance relationships with customers, suppliers, distributors, and others Receive feedback on the status of every link in the supply Control inventory

31. 7-31 What is a Supply Chain? The interrelationships –With suppliers, customers, distributors, and other businesses –Needed to design, build, and sell a product Each supply chain process should add value to the products or services a company produces –Frequently called a value chain

32. 7-32 Supply Chain Life Cycle

33. 7-33 Electronic Data Interchange The electronic exchange of business transaction documents between supply chain trading partners One of the earliest uses of information technology for supply chain management Many transactions occur over the Internet, using secure virtual private networks The almost complete automation of an e-commerce supply chain process

34. 7-34 Typical EDI Activities

35. 7-35 Roles and Activities of SCM in Business

36. 7-36 Planning & Execution Functions of SCM Supply chain design Collaborative demand & supply planning Planning Materials management Collaborative manufacturing Collaborative fulfillment Execution Supply chain event management Supply chain performance management

37. 7-37 Benefits and Challenges of SCM Key Benefits Faster, more accurate order processing Strategic relationships with supplier Lower transaction and materials cost Quicker times to market Reductions in inventory levels

38. 7-38 Goals and Objectives of SCM

39. 7-39 Benefits and Challenges of SCM Key Challenges –Lack of demand planning knowledge, tools, and guidelines –Inaccurate data provided by other information systems –Lack of collaboration among marketing, production, and inventory management –SCM tools are immature, incomplete, and hard to implement

40. 7-40 Enterprise Application Integration EAI software connects cross-functional systems Serves as middleware to provide –Data conversion –Communication between systems –Access to system interfaces

41. 7-41 How EAI Works

42. 7-42 Transaction Processing Systems Cross-functional information systems that process data resulting from the occurrence of business transactions –Transactions include sales, purchases, deposits, withdrawals, refunds, and payments –Online transaction processing (OLTP) is a real-time system that captures transactions immediately

43. 7-43 Transaction Processing Systems

44. 7-44 The Transaction Processing Cycle

45. 7-45 Enterprise Collaboration Systems (ECS) EC systems are cross-functional information systems that enhance team and workgroup –Communication –Coordination –Collaboration Systems may include –Networked PC workstations –Servers –Databases –Groupware and application packages

46. 7-46 ECS Tools

47. 7-47 Functional Business Systems Various types of information systems that support the business functions of… Accounting Finance Marketing Operations management Human resource management

48. 7-48 Case 2: OHSU, Sony, Novartis, and Others Oregon Health & Science University uses Oracle’s iRecruitment application, which is part of its E-Business HR Management System suite –Managers can request a new employee and process applications electronically –Handles most administrative work, including routing forms and posting jobs on the Web site –The university fills job openings two weeks faster and saves $1,500 per job More and more HR is being called to be a strategic business partner, and professionals in this area are turning to IT for innovative solutions

49. 7-49 Case Study Questions What are some of the business benefits of the technologies described in the case? –Provide examples beyond the automation of transaction-oriented processes Do you think the business value of these strategic HRM applications depends on the type of business a company is in? –For instance, consulting, manufacturing, or professional services?

50. 7-50 Case Study Questions What are some of the challenges and obstacles in developing and implementing HRM systems? –Are these unique to this type of system? –What strategies would you recommend for companies to meet those challenges?

51. 7-51 IT in Business

52. 7-52 Marketing Systems Marketing systems are concerned with… Planning, promotion, and sale of existing products in existing markets Development of new products and new markets Better attracting and serving present and potential customers

53. 7-53 Marketing Information Systems

54. 7-54 Interactive Marketing –A customer-focused marketing process –Uses the Internet, intranets, and extranets –Establishes two-way transactions between a business and its customers or potential customers Goal –Profitably use networks to attract and keep customers –Get customers to help create, purchase, and improve products and services

55. 7-55 Targeted Marketing Advertising and promotion management concept with five targeting components

56. 7-56 Sales Force Automation Outfit sales force with notebook computers, web browsers, and sales contact software –Connect them to marketing websites and the company intranet Goals –Increase personal productivity –Speed up capture and analysis of sales data –Gain strategic advantage

57. 7-57 Manufacturing Information Systems Supports production/operations functions –All activities concerned with planning and control of the processes tied to producing goods or services

58. 7-58 Computer-Integrated Manufacturing

59. 7-59 CIM Objectives Simplify… production processes, product designs, and factory organization Automate… production processes and the business functions that support them Integrate… all production and support processes using –Networks –Cross-functional business software –Other information technologies

60. 7-60 CIM Objectives CIM supports the concepts of… Agile manufacturing Total quality management (TQM) Flexible manufacturing systems

61. 7-61 Manufacturing Information Systems Computers help engineers design products –Computer-aided engineering (CAE) –Computer-aided design (CAD) –Computer-aided manufacturing (CAM) Manufacturing also uses software –Computer-aided process planning –Material requirements planning (MRP) –Manufacturing resource planning –Manufacturing execution systems (MES) –Process and machine control

62. 7-62 Human Resource Management (HRM) Information systems support –Planning to meet personnel needs –Development of employees to their full potential –Control of all personnel policies and programs

63. 7-63 HRM Systems

64. 7-64 HRM and the Internet Recruitment via the company website & commercial recruiting services Posting messages in selected Internet newsgroups Communicating with job applicants via e-mail

65. 7-65 HRM and Corporate Intranets Corporate intranet uses Disseminate information faster than previous company channels Process common HRM transactions Around-the-clock HRM services Training Collect information from employees online Allow HRM tasks to be performed with little HRM dept. intervention

66. 7-66 Employee Self-Service Intranet applications can allow employees to View benefits Enter travel and expense reports Verify employment and salary information Access and update personal information Enter time-sensitive data Receive training Produce automated pay sheets

67. 7-67 Accounting Information Systems Oldest and most widely used information system in business Records and reports business transactions and economic events Produces financial statements Forecasts future conditions

68. 7-68 Accounting Information Systems

69. 7-69 Financial Management Systems Supports business managers and professionals making decisions concerning –Financing of a business –Allocation and control of financial resources within a business

70. 7-70 Financial Management Systems

71. 7-71 Case 3: Perdue Farms and Others Even the best companies are challenged by supply chain pressures during holidays The holiday season is difficult for manufacturers and retailers because they’re making educated guesses and bets on what demand is going to be –They’re not going to get it right every time Delivering the right number of products to the right customers at the right time is very important –Businesses are turning to forecasting and supply chain management tools

72. 7-72 Case Study Questions What key factors determine the success or failure of supply chains during the holiday season? –Which of these are, or could be, under the control of companies, and which are inherent in the end-consumer business? Consider the increasing use of gift cards in lieu of gifts during the holiday season –What effects does this new practice introduce into demand planning and supply chain management?

73. 7-73 Case Study Questions Consider that virtually nothing is known about the recipients of gift cards –What strategies can retailers and their suppliers consider to accommodate these effects? Prof. Brian Tomlin says that smart companies substitute information for inventory –What do you think he means by this? –How do you think companies can take advantage of more extensive and accurate information to improve their inventory and logistic practices?