1 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6 Enterprise e-Business Systems

2 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives  Identify and give examples to illustrate the following aspects of customer relationship management, enterprise resource management, and supply chain management systems:  Business processes supported  Customer and business value provided  Potential challenges and trends

3 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section I Customer Relationship Management: The Business Focus

4 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management  Provides customer-facing employees with a single, complete view of every customer at every touch point and across all channels  Provides the customer with a single, complete view of the company and its extended channels

5 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  CRM..  Integrates and automates many of the customer serving processes  Creates an IT framework of Web-enabled software & databases that integrates these processes with the rest of the company’s business operations

6 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Includes software modules that provide tools that enable a business & its employees to provide fast, convenient, dependable, consistent service.

7 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Major Application Components  Contact & Account Management  Helps capture and track relevant data about past and planned contacts with prospects & customers.

8 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Sales  Provides sales reps with software tools & company data needed to support & manage their sales activities.  Helps optimize cross-selling & up-selling

9 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Marketing & Fulfillment  Helps accomplish direct marketing campaigns by automating tasks  Helps capture & manage prospect & customer response data  Helps in fulfillment by quickly scheduling sales contacts & providing appropriate information on products & services to them

10 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Customer Service and Support  Provides software tools & real-time access to the common customer database  Helps create, assign, & manage requests for service from customers  Call center software  Help desk software

11 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Retention and Loyalty Programs  Helps the company identify, reward, and market to their most loyal and profitable customers

12 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)

13 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Three Phases of CRM  Acquire (new customers)  By doing a superior job of contact management, sales prospecting, selling, direct marketing, & fulfillment.

14 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Enhance (customer satisfaction)  By supporting superior service from a responsive networked team of sales and service specialists.

15 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Retain (your customers)  Help identify and reward your most loyal, profitable customers.

16 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Benefits and Challenges  Allows a business to identify its best customers  Makes possible real-time customization & personalization of products & services based on customer wants, needs, buying habits, & life cycles

17 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Benefits and Challenges (continued)  Enables a company to provide a consistent customer service experience  Failures  Due to lack of understanding & preparation.  CRM is not a silver bullet

18 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Customer Relationship Management (continued)  Trends  Operational CRM  Analytical CRM  Collaborative CRM  Portal-based CRM

19 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section II Enterprise Resource Planning: The Business Backbone

20 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning  Serves as a cross-functional enterprise backbone that integrates & automates many internal business processes and information systems  Helps companies gain the efficiency, agility, & responsiveness needed to succeed today

21 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Gives a company an integrated real-time view of its core business processes  ERP software suites typically consist of integrated modules of…  Manufacturing  Distribution  Sales  Accounting  Human Resource Management

22 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Benefits and Challenges  Quality and efficiency  Helps improve the quality and efficiency of customer service, production, & distribution by creating a framework for integrating and improving internal business processes

23 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Decreased Costs  Reductions in transaction processing costs and hardware, software, and IT support staff

24 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Decision support  Provides cross-functional information on business performance to assist managers in making better decisions

25 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Enterprise agility  Results in more flexible organizational structures, managerial responsibilities, and work roles

26 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Costs of ERP  The costs and risks of failure in implementing a new ERP system are substantial.

27 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)

28 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Causes of ERP failures  Underestimating the complexity of the planning, development, and training required  Failure to involve affected employees in the planning & development phases and change management programs

29 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Trying to do too much, too fast  Insufficient training  Believing everything the software vendors and/or consultants say

30 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning (continued)  Trends  Flexible ERP  Web-enabled ERP  Interenterprise ERP  E-Business Suites

31 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section III Supply Chain Management: The Business Network

32 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management  A cross-functional interenterprise system that uses IT to help support & manage the links between some of a company’s key business processes and those of its suppliers, customers, & business partners.  Goal is to create a fast, efficient, & low-cost network of business relationships.

33 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)

34 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)  Electronic data interchange  Exchanging business transaction documents over the Internet & other networks between supply chain trading partners

35 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)  The Role of SCM

36 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)  Benefits and Challenges  Can provide faster, more accurate order processing, reductions in inventory levels, quicker time to market, lower transaction and materials costs, & strategic relationships with suppliers

37 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)  Problem causes  Lack of proper demand planning knowledge, tools, and guidelines  Inaccurate or overoptimistic demand forecasts  Inaccurate production, inventory, and other business data  Lack of adequate collaboration

38 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Supply Chain Management (continued)  Trends

39 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions  Should a company become a customer-focused business?  Why would systems that enhance a company’s relationships with customers have such a high rate of failure?

40 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  How could some of the spectacular failures of ERP systems have been avoided?  Should companies continue to use EDI systems?

41 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  How can the problem of overenthusiastic demand forecasts in supply chain planning be avoided?  What challenges do you see for a company that wants to implement collaborative SCM systems?

42 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Discussion Questions (continued)  Should companies install e-business software suites or “best of breed” e-business software components?

43 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 – Mitsubishi Motor Sales  What are the key application components of Mitsubishi’s CRM system?  What is the business use of each of those components?

44 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  What are the benefits to a business and its customers of a CRM system like Mitsubishi’s?  Do you approve of Mitsubishi’s approach to acquiring and installing its CRM system?

45 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  Why have many CRM systems failed to provide promised benefits like those generated by Mitsubishi’s system?

46 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 – Agilent Technologies & Russ Berrie  What are the main reasons companies experience failures in implementing ERP systems?  What are several key things companies should do to avoid ERP systems failures?

47 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  Why do you think ERP systems in particular are often cited as examples of failures in IT systems development, implementation, or management?

48 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  What do you think caused the major failure of Agilent’s ERP implementation?  Why do you think they did not act to avoid the reasons you specified?

49 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 – TaylorMade Golf & HON Industries  How could moving business information systems with suppliers and distributors to the Web result in such dramatic business benefits as experienced by TaylorMade Golf?  How does HON Industries’ new SCM system improve the efficiency of their supply chain?

50 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  What other SCM initiatives would you recommend that TaylorMade or HON Industries implement to improve their supply chain performance and business value?

51 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  What are several ways a small business could use supply chain management to improve the efficiency and business value of their supply chain?

52 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 – H-P, Eastman Chemical, & Others  Why can both large and small businesses cut costs and increase revenues by moving their supply chains online?

53 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  What is the business value to Eastman Chemical and W.W. Grainger of their initiatives to help their suppliers and customers do business online?

54 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  Why are many small suppliers reluctant to do business online with their large customers?  What can be done to encourage small suppliers to get online?

55 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 – Wal-Mart & Mattel  Do you agree that Wal-Mart is “the best supply chain operator of all time”?  Why or why not?

56 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  What has Mattel learned from Wal-Mart?  How well are they applying it to their own business?

57 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  What can other businesses learn from the experiences of Wal-Mart and Mattel that could improve their supply chain performance?