e-Business SystemsChapter 7Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Learning ObjectivesIdentify these cross-functional enterprise systems, and give examples of how they can provide business value to a companyResource planningCustomer Relationship ManagementSupply chain managementEnterprise application integrationTransaction processing systemsEnterprise collaboration systems

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Learning ObjectivesGive examples of how the Internet and other information technologies support business processes within the business functions ofAccountingFinanceHuman resource managementMarketingProduction Operations management

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Learning ObjectivesUnderstand the need for enterprise application integration to improve the support of business interactions across multiple e-business applications

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Enterprise Business SystemsE-businessUsing the Internet, other networks, and IT to supportElectronic commerceEnterprise communications and collaborationWeb-enabled business processesE-commerceBuying, selling, and marketing of products, services, and information over the Internet and other networks

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Case 1: NetSuite, Berlin Packaging, Churchill DownsCRM software helps sales and marketing professionals increase sales revenue by providing more and better services to customers and prospectsCRM implementationOften fails due to difficulty of migrating data Is easier to do early in a companys historyCompanies must ensure data are in order before launching any major CRM initiative

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Case Study QuestionsWhat 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?

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Case Study QuestionsOne of the main issues in the case is the importance of good data to the success of CRM implementationsIn Chapter 5, we compared the file processing and database management approaches to data resource managementWhich of the problems discussed there do you see in this case?How do CRM applications attempt to address them?

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Cross-Functional SystemsCross-functional systems cross the boundaries of traditional business functions

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Enterprise Application Architecture

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Managing at the Enterprise LevelGetting the whole business to fly in the same direction, as efficiently as possibleCustomer relationshipsBack-office operationsMovement of raw materials & finished goods

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Customer Relationship ManagementA customer-centric focusCustomer relationships are a companys most valued assetEvery company should find and retain the most profitable customers possible

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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 channelsCRM uses IT to create a cross functional enterprise system that integrates and automates customer-serving processes

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Application Clusters in CRM

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Contact and Account ManagementCRM helps sales, marketing, and service professionals capture and track relevant data aboutEvery past and planned contact with prospects and customersOther customer business & life-cycle eventsData are captured through touchpointsTelephone, fax, e-mail, WebsitesRetail stores, kiosks, personal contact

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SalesA CRM system provides sales reps with the tools and data resources they need toSupport and manage sales activitiesOptimize cross- and up-sellingCRM also provides the means to check on a customers account status and history before scheduling sales calls

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Marketing and FulfillmentCRM systems help with direct marketing campaigns by automating tasksQualifying leads for targeted marketingScheduling and tracking mailingsCapturing and managing responsesAnalyzing the business value of a campaignFulfilling responses & requests

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Customer Service and SupportCRM helps customer service managers create, assign and manage customers requests for serviceCall center softwareHelp desk softwareWeb-based self-service

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Retention and Loyalty ProgramsBoosting customer retention 5% can boost profits 85%It costs 6 times more to sell to a new customerAn unhappy customer will tell 8-10 othersThe 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

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Retention and Loyalty ProgramsEnhancing and optimizing customer retention and loyalty is a primary objective of CRMIdentify, reward, and market to the most loyal and profitable customersEvaluate targeted marketing and relationship programs

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Three Phases of CRM

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Benefits and Challenges of CRMReal-time customization and personalization of products and servicesTrack when and how a customer contacts the companyIdentify and target the best customersProvide a consistent customer experienceProvide superior service and support across all customer contact pointsBenefits of CRM

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CRM FailuresBusiness benefits of CRM are not guaranteed50% of CRM projects did not produce promised results20% damaged customer relationshipsReasons for failureLack of understanding and preparationNot solving business process problems firstNo participation on part of involved business stakeholders

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What is ERP?Facilitates business, supplier, and customer information flowsSupports basic internal business processesAn integrated suite of software modulesThe backbone of business processesA cross-functional enterprise system

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ERP Application Components

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Benefits and Challenges of ERP

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Costs of Implementing a New ERP

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Causes of ERP FailuresCommon Causes of ERP FailureOver-reliance on ERP vendor or consultantsUnder-estimating the complexity of planning, development, trainingFailure to involve affected employees in planning and developmentTrying to do too much, too fastInsufficient trainingInsufficient data conversion and testing

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Supply Chain Management (SCM)Supply chain management helps a companyGet the right productsTo the right placeAt the right timeIn the proper quantityAt an acceptable cost

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Goals of SCMForecast demandEnhance relationships with customers, suppliers, distributors, and othersReceive feedback on the status of every link in the supplyControl inventory

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What is a Supply Chain?The interrelationshipsWith suppliers, customers, distributors, and other businesses Needed to design, build, and sell a productEach supply chain process should add value to the products or services a company producesFrequently called a value chain

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Supply Chain Life Cycle

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Electronic Data InterchangeThe electronic exchange of business transaction documents between supply chain trading partnersOne of the earliest uses of information technology for supply chain managementMany transactions occur over the Internet, using secure virtual private networksThe almost complete automation of an e-commerce supply chain process

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Typical EDI Activities

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Roles and Activities of SCM in Business

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Planning & Execution Functions of SCMSupply chain designCollaborative demand & supply planningPlanningMaterials managementCollaborative manufacturingCollaborative fulfillmentExecutionSupply chain event managementSupply chain performance management

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Benefits and Challenges of SCMKey Benefits

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Goals and Objectives of SCM

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Benefits and Challenges of SCMKey ChallengesLack of demand planning knowledge, tools, and guidelinesInaccurate data provided by other information systemsLack of collaboration among marketing, production, and inventory managementSCM tools are immature, incomplete, and hard to implement

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Enterprise Application IntegrationEAI software connects cross-functional systemsServes as middleware to provideData conversionCommunication between systemsAccess to system interfaces

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How EAI Works

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Transaction Processing SystemsCross-functional information systems that process data resulting from the occurrence of business transactionsTransactions include sales, purchases, deposits, withdrawals, refunds, and paymentsOnline transaction processing (OLTP) is a real-time system that captures transactions immediately

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Transaction Processing Systems

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The Transaction Processing Cycle

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Enterprise Collaboration Systems (ECS)EC systems are cross-functional information systems that enhance team and workgroupCommunicationCoordinationCollaborationSystems may includeNetworked PC workstationsServersDatabasesGroupware and application packages

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ECS Tools

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Functional Business SystemsVarious types of information systems that support the business functions ofAccountingFinanceMarketingOperations managementHuman resource management

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

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Case Study QuestionsWhat are some of the business benefits of the technologies described in the case? Provide examples beyond the automation of transaction-oriented processesDo 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?

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Case Study QuestionsWhat 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?

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IT in Business

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Marketing SystemsMarketing systems are concerned with

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Marketing Information Systems

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Interactive MarketingInteractive MarketingA customer-focused marketing processUses the Internet, intranets, and extranetsEstablishes two-way transactions between a business and its customers or potential customersGoalProfitably use networks to attract and keep customersGet customers to help create, purchase, and improve products and services

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Targeted MarketingAdvertising and promotion management concept with five targeting components

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Sales Force AutomationOutfit sales force with notebook computers, web browsers, and sales contact softwareConnect them to marketing websites and the company intranetGoalsIncrease personal productivitySpeed up capture and analysis of sales dataGain strategic advantage

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Manufacturing Information SystemsSupports production/operations functionsAll activities concerned with planning and control of the processes tied to producing goods or services

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Computer-Integrated Manufacturing

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CIM ObjectivesSimplify production processes, product designs, and factory organization Automate production processes and the business functions that support themIntegrate all production and support processes usingNetworksCross-functional business softwareOther information technologies

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CIM ObjectivesCIM supports the concepts ofAgile manufacturingTotal quality management (TQM)Flexible manufacturing systems

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Manufacturing Information SystemsComputers help engineers design productsComputer-aided engineering (CAE)Computer-aided design (CAD)Computer-aided manufacturing (CAM)Manufacturing also uses softwareComputer-aided process planningMaterial requirements planning (MRP)Manufacturing resource planningManufacturing execution systems (MES)Process and machine control

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Human Resource Management (HRM)Information systems supportPlanning to meet personnel needsDevelopment of employees to their full potentialControl of all personnel policies and programs

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HRM Systems

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HRM and the InternetRecruitment via the company website & commercial recruiting servicesPosting messages in selected Internet newsgroupsCommunicating with job applicants via e-mail

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HRM and Corporate IntranetsCorporate intranet usesDisseminate information faster than previous company channelsProcess common HRM transactionsAround-the-clock HRM servicesTrainingCollect information from employees onlineAllow HRM tasks to be performed with little HRM dept. intervention

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Employee Self-ServiceIntranet applications can allow employees toView benefitsEnter travel and expense reportsVerify employment and salary informationAccess and update personal informationEnter time-sensitive dataReceive trainingProduce automated pay sheets

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Accounting Information SystemsOldest and most widely used information system in businessRecords and reports business transactions and economic eventsProduces financial statementsForecasts future conditions

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Accounting Information Systems

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Financial Management SystemsSupports business managers and professionals making decisions concerningFinancing of a businessAllocation and control of financial resources within a business

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Financial Management Systems

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Case 3: Perdue Farms and OthersEven the best companies are challenged by supply chain pressures during holidaysThe holiday season is difficult for manufacturers and retailers because theyre making educated guesses and bets on what demand is going to beTheyre not going to get it right every timeDelivering 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

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Case Study QuestionsWhat 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 seasonWhat effects does this new practice introduce into demand planning and supply chain management?

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Case Study QuestionsConsider 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?

Cross-functional systems are used to reengineer and improve vital business processes all across the enterprise

This slide presents an overview of enterprise application architecture. It shows the major cross-functional enterprise applications and their interrelationships.Focuses on accomplishing fundamental business processes in concert withCustomersSuppliersPartnersEmployees

Community: customized ads to appeal to specific virtual communitiesContent: ads placed on a variety of selected websites, aimed at a specific audienceContext: ads placed on web pages that are relevant to a product or serviceDemographic/Psychographic: web marketing aimed at specific types or classes of peopleOnline behavior: promotions tailored to each visit to a site by an individual