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Chapter 7

e-Business Systems


Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

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

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

Operations management

Learning Objectives

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


Enterprise Business Systems


Using the Internet, other networks, and IT to support Electronic commerce Enterprise communications and collaboration Web-enabled business processes


Buying, selling, and marketing of products, services, and information over the Internet and other networks


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 companys history

Companies must ensure data are in order before launching any major CRM initiative

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?


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?

Cross-Functional Systems

Cross-functional systems cross the boundaries of traditional business functions


Enterprise Application Architecture


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

Customer Relationship Management

A customer-centric focus
Customer relationships are a companys most valued asset Every company should find and retain the most profitable customers possible

What is CRM?

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


Application Clusters in CRM


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


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 customers account status and history before scheduling sales calls

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

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

Retention and Loyalty Programs

70% of complaining customers will do business with the company again if it quickly fixes a problem

The odds of selling to an existing customer are 50%; a new one 15%

It costs 6 times more to sell to a new customer

An unhappy customer will tell 8-10 others

Boosting customer retention 5% can boost profits 85%


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 7-20

Three Phases of CRM


Benefits and Challenges of CRM

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

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

What is ERP?

Facilitates business, supplier, and customer information flows

The backbone of business processes

A cross-functional enterprise system

Supports basic internal business processes An integrated suite of software modules


ERP Application Components


Benefits and Challenges of ERP

ERP Business Benefits

1. Quality & efficiency 2. Decreased costs

ERP Costs
1. High risk & cost

3. Decision support
4. Enterprise agility

2. Hardware and software are a small part of overall project

3. Failure can cripple or kill a business


Costs of Implementing a New ERP


Causes of ERP Failures

Common Causes of ERP Failure

Underestimating the complexity of planning, development, training Failure to involve affected employees in planning and development

Over-reliance on ERP vendor or consultants

Insufficient training

Insufficient data conversion and testing

Trying to do too much, too fast


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

Goals of SCM

Forecast demand

Control inventory

Enhance relationships with customers, suppliers, distributors, and others

Receive feedback on the status of every link in the supply


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


Supply Chain Life Cycle


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 The almost complete automation of an e-commerce supply chain process Many transactions occur over the Internet, using secure virtual private networks


Typical EDI Activities


Roles and Activities of SCM in Business


Planning & Execution Functions of SCM

Planning Supply chain design Collaborative demand & supply planning


Materials management

Collaborative manufacturing
Collaborative fulfillment Supply chain event management

Supply chain performance management


Benefits and Challenges of SCM

Faster, more accurate order processing

Reductions in inventory levels

Key Benefits
Strategic relationships with supplier Lower transaction and materials cost

Quicker times to market


Goals and Objectives of SCM


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


Enterprise Application Integration

EAI software connects cross-functional systems Serves as middleware to provide

Data conversion Communication between systems Access to system interfaces

How EAI Works


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


Transaction Processing Systems


The Transaction Processing Cycle


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

ECS Tools


Functional Business Systems

Various types of information systems that support the business functions of


Marketing Operations management Human resource management


Case 2: OHSU, Sony, Novartis, and Others

Oregon Health & Science University uses Oracles 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


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?


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?


IT in Business


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


Marketing Information Systems


Interactive Marketing

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

Profitably use networks to attract and keep customers Get customers to help create, purchase, and improve products and services

Targeted Marketing

Advertising and promotion management concept with five targeting components


Sales Force Automation

Outfit sales force with notebook computers, web browsers, and sales contact software
Connect them to marketing websites and the company intranet

Increase personal productivity Speed up capture and analysis of sales data Gain strategic advantage


Manufacturing Information Systems

Supports production/operations functions

All activities concerned with planning and control of the processes tied to producing goods or services

Computer-Integrated Manufacturing


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

CIM Objectives

CIM supports the concepts of

Flexible manufacturing systems

Agile manufacturing

Total quality management (TQM)


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

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

HRM Systems


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


HRM and Corporate Intranets

Corporate intranet uses

Disseminate information faster than previous company channels

Process common HRM transactions

Around-the-clock HRM services

Collect information from employees online

Allow HRM tasks to be performed with little HRM dept. intervention



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

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


Accounting Information Systems


Financial Management Systems

Supports business managers and professionals making decisions concerning

Financing of a business Allocation and control of financial resources within a business

Financial Management Systems


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 theyre making educated guesses and bets on what demand is going to be
Theyre 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


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?

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?