Lecture Business driven information systems (4/e): Chapter 8 - Paige Baltzan

Chapter 8 - Enterprise applications: Business communications. When you finish this chapter, you should: Explain integrations and the role they play in connecting a corporation, describe supply chain management along with its associated benefits and challenges, describe customer relationship management along with its associated benefits and challenges, describe enterprise resource planning along with its associated benefits and challenges.

© 2014 by McGraw-Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied,

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

CHAPTER EIGHT

ENTERPRISE

APPLICATIONS

BUSINESS COMMUNICATIONS

CHAPTER OVERVIEW

 SECTION 8.1 – Enterprise Systems and Supply Chain Management

• Building a Connected Corporation Through Integrations

• Supply Chain Management

• The Benefits of SCM

• The Challenges of SCM

• The Future of SCM

CHAPTER OVERVIEW

 SECTION 8.2 – Customer Relationship

Management and Enterprise Resource Planning

• Customer Relationship Management

• The Benefits of CRM

• The challenges of CRM

• The Future of CRM

• Enterprise Resource Planning

• The Benefits of ERP

• The challenges of ERP

• The Future of Enterprise Systems, Integrating SCM,

CRM, and ERP

© 2014 by McGraw-Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied,

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

LEARNING OUTCOMES

1 Explain integrations and the role they play in

connecting a corporation

2 Describe supply chain management along

with its associated benefits and challenges

THROUGH INTEGRATIONS

 Integration – Allows separate

systems to communicate directly

with each other, eliminating the

need for manual entry into multiple

systems

• Forward integration

• Backward integration

THROUGH INTEGRATIONS

Integration Example

THROUGH INTEGRATIONS

A Central Information Repository Example

Integration Tools

 Enterprise system – Provide

enterprisewide support and

data access for a firm’s

operations and business

processes

 Enterprise application

integration (EAI) – Connects

the plans, methods, and tools

aimed at integrating separate

enterprise systems

Integration Tools

 Middleware – Several different types

of software that sit between and

provide connectivity for two or more

software applications

 Enterprise application integration

middleware – Takes a new approach

to middleware by packaging commonly

used applications together, reducing

the time needed to integrate

applications from multiple vendors

Integration Tools

Three Primary Enterprise Systems

SUPPLY CHAIN MANAGEMENT

 Five basic supply chain activities

SUPPLY CHAIN MANAGEMENT

 Supply Chain Management (SCM) – The management

of information flows between and among activities in a

supply chain to maximize total supply chain effectiveness and profitability

SUPPLY CHAIN MANAGEMENT

 The supply chain has three main links

1 Materials flow from suppliers and their

“upstream” suppliers at all levels

2 Transformation of materials into

semifinished and finished products through the organization’s own production process

3 Distribution of products to customers and

their “downstream” customers at all levels

SUPPLY CHAIN MANAGEMENT

Supply Chain Example

SUPPLY CHAIN MANAGEMENT

Walmart and Procter & Gamble SCM Example

SUPPLY CHAIN MANAGEMENT

 Effective and efficient SCM systems can enable

an organization to

• Decrease the power of its buyers

• Increase its own supplier power

• Increase switching costs to reduce the threat of

substitute products or services

• Create entry barriers thereby reducing the threat of

new entrants

• Increase efficiencies while seeking a competitive

advantage through cost leadership

SUPPLY CHAIN MANAGEMENT

Effective and Efficient SCM Systems

Effect on Porter’s Five Forces

Improved Visibility

 Supply chain visibility – The ability to view all areas

up and down the supply chain in real time

 Supply chain planning system – Uses advanced

mathematical algorithms to improve the flow and

efficiency of the supply chain while reducing inventory

 Supply chain execution system – Automates the

different activities of the supply chain

 Bullwhip effect – Occurs when distorted product

demand information ripples from one partner to the

next throughout the supply chain

Improved Visibility

Supply Chain Planning and Execution

Improved Profitability

 Companies can respond faster and more

effectively to consumer demands through

supply chain enhances

 Demand planning system – Generates

demand forecasts using statistical tools and

forecasting techniques, so companies can

respond faster and more effectively to

consumer demands through supply chain

enhancements

Improved Profitability

 Common supply chain metrics include:

• Back order

• Inventory cycle time

• Customer order cycle time

• Inventory turnover

THE CHALLENGES OF SCM

 Primary challenges include

• Cost – An SCM system can cost millions of dollars

for the software and millions more for help

implementing the system

• Complexity - The move towards globalization is

increasing complexity in the supply chain

THE FUTURE OF SCM

 Fastest growing SCM components

• Collaborative demand planning

• Collaborative engineering

• Selling chain management

• Supply chain event management (SCEM)

© 2014 by McGraw-Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied,

scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Resource

Planning

LEARNING OUTCOMES

3 Describe customer relationship management

along with its associated benefits and

challenges

4 Describe enterprise resource management

along with its associated benefits and

challenges

 Customer relationship management (CRM) –

Involves managing all aspects of a customer’s

relationship with an organization to increase

customer loyalty and retention and an

organization's profitability

 Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

MANAGEMENT

THE BENEFITS OF CRM

 Organizations can find their most

valuable customers through “RFM”

- Recency, Frequency, and

Evolution of CRM

 CRM reporting technology – Help organizations

identify their customers across other applications

 CRM analysis technologies – Help organization

segment their customers into categories such as best and worst customers

 CRM predicting technologies – Help

organizations make predictions regarding

customer behavior such as which customers are

at risk of leaving

Evolution of CRM

Operational and Analytical CRM

 Operational CRM – Supports

traditional transactional processing for

day-to-day front-office operations or

systems that deal directly with the

customers

 Analytical CRM – Supports

back-office operations and strategic

analysis and includes all systems that

do not deal directly with the customers

Operational and Analytical CRM

Operational and Analytical CRM

 Marketing and operational CRM technology

• List generator, campaign management, cross-selling and up-selling

 Sales and operational CRM technology

• Sales management, contact management,

Marketing and Operational CRM

 Three marketing operational CRM

technologies

1 List generator

2 Campaign management system

3 Cross-selling and up-selling

Sales and Operational CRM

 The sales department was the first to begin developing

CRM systems with sales force automation a system that

automatically tracks all of the steps in the sales process

Sales and Operational CRM

 Sales and operational CRM technologies

1 Sales management CRM system

2 Contact management CRM system

3 Opportunity management CRM system

Operational CRM

 Three customer service operational CRM

technologies

1 Contact center (call center)

2 Web-based self-service system

3 Call scripting system

 Common features included in contact centers

• Automatic call distribution

• Interactive voice response

• Predictive dialing

Analytical CRM

 Website personalization – Occurs when a

website has stored enough data about a person’s likes and dislikes to fashion offers more likely to appeal to that person

• Analytical CRM relies heavily on data warehousing

technologies and business intelligence to glean insights into customer behavior

• These systems quickly aggregate, analyze, and

disseminate customer information throughout an organization

THE CHALLENGES OF CRM

 The customer is

always right and

now has more

power than ever

thanks to the

Internet

THE FUTURE OF CRM

 Current trends include

• Supplier relationship management

 Enterprise resource planning – Integrates all

departments and functions throughout an

organization into a single IT system (or

integrated set of IT systems) so that employees can make enterprisewide decisions by viewing

enterprisewide information on all business

operations

• ERP addresses global information

sharing and reporting

• ERP avoids the pain and expense

of fixing legacy systems

 ERP systems collect data from across an

organization and correlates the data generating

an enterprisewide view

ERP Systems Automate Business Processes

The Organization Before ERP

ERP Bringing The Organization Together

THE BENEFITS OF ERP

 Core ERP component – Traditional

components included in most ERP systems and they primarily focus on internal operations

 Extended ERP component – Extra

components that meet the organizational needs not covered by the core components and

primarily focus on external operations

THE BENEFITS OF ERP

THE BENEFITS OF ERP

Core ERP Components

 Three most common core ERP

components

1 Accounting and finance

2 Production and materials management

3 Human resource

Accounting and Finance ERP Components

 Accounting and finance ERP component –

Manages accounting data and financial

processes within the enterprise with functions

such as general ledger, accounts payable,

accounts receivable, budgeting, and asset

management

the various aspects of

production planning and

execution such as

demand forecasting,

production scheduling,

job cost accounting,

and quality control

Human Resource ERP Component

 Human resource ERP component – Tracks

employee information including payroll, benefits, compensation, performance assessment, and

assumes compliance with the legal

requirements of multiple jurisdictions and tax

authorities

Extended ERP Components

 Extended ERP components include:

• Business intelligence

• Customer relationship management

• Supply chain management

• Ebusiness components include

Elogistics

Eprocurement

Measuring ERP Success

 Balanced scorecard – Enables organizations

to clarify their vision and strategy and translate them into action

 Balanced scorecard views the organization from four perspectives

• Learning and growth

• Internal business process

• Customer

• Financial

Measuring ERP Success

THE CHALLENGE OF ERP

 ERP systems contain multiple complex

components that are not only expensive to

purchase, but also expensive to implement

INTEGRATING SCM, CRM, AND ERP

 SCM, CRM, and ERP are the

backbone of ebusiness

 Integration of these applications is

the key to success for many

companies

 Integration allows the unlocking of

information to make it available to

any user, anywhere, anytime

INTEGRATING SCM, CRM, AND ERP

INTEGRATING SCM, CRM, AND ERP

SCM, CRM, and ERP Integration

LEARNING OUTCOME REVIEW

 Now that you have finished the chapter

please review the learning outcomes in

your text