The Institute of Chartered Accountants of Bangladesh (ICAB)

Course Name: Information Technology (IT) Session: October, 2018-November, 2018

Professional Stage: Certificate Level Section: G
Course Teacher: Abdulla-Al-Mahmud FCA, FCMA, FCS, MBA, LL.B Lecture Synopsis-06

Chapter: Enterprise Business Systems

Topic: Customer relationship management (CRM):

In continuously growing competitive market, it is very much important for a business to share right
information to the right person at the right time, otherwise business will lose its opportunities to
sale products or services. Customer Relationship Management software is the only solution that
can help business to communicate with prospects or customers properly. For any CRM
application, primary goal is to enable an organization to understand customers’ need and behavior
and provide better quality of service. It helps to retain existing customers and capture new
opportunities by building a strong relationship between an organization and customers. CRM can
analyze data and generate reports whenever required.

The three phases of CRM:

Customer relationship management plays an integral part in a typical company's marketing
system. CRM is a process of gathering and analyzing customer data, building precise marketing
campaigns and managing relationships for optimized retention. These activities are performed
over the three phases of customer acquisition, retention and extension or expansion.
Customer acquisition:
Acquiring customers has always been the first important step in establishing business
relationships. With CRM, advanced software databases are used to capture key customer data at
the point of first contact. Profile data includes a name, address, phone number, e-mail address and
sometimes social media accounts. Entering this data into a computer enables future and ongoing
communication access.
The other major benefit of starting a formal relationship with new prospects and clients is the ability
to track their behaviors through data analysis. Many databases enable analytics, the automated
analysis of data through programmed tools. Salespeople can identify at any point in time, for
instance, what percentage of customers are at each stage of the opportunity pipeline, or sales
process. This knowledge allows for optimized targeting to avoid bottlenecks and to facilitate
relationship-building activities.
Customer extension:
The customer extension phase of CRM includes activities intended to draw out the length of typical
customer relationships, enabling greater revenue. A simple perspective is that satisfying a
customer during one buying experience increases the likelihood of a follow-up visit. Over time,
delivering quality solutions, following through on commitments and addressing problems convert a
buyer into a loyal customer. Company’s also can enhance revenue through add-on product selling
and cross-selling, which involves recommending unrelated solutions. Because of the high costs of
customer acquisition, extending relationships with customers already captured is hugely valuable
for a business.
Customer retention:
The real purpose of gathering data on acquired customers is to improve retention rates. The
typical customer attrition rate for companies is around 15 to 20 percent per year, but a 2013
Forbes article indicates that some industries experience significantly higher average rates.
Effective data analysis, regular and systematic follow-up communication with contacts, and well-
serviced accounts help to reduce company's churn rate. Data analysis allows to identify the traits
of prospects and customers that offer the best lifetime earning potential as well, which enables
greater focus on retaining core customers.

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Benefits & business challenges of CRM:
Customer relationship management (CRM) is a popular business marketing system. Companies
use database technology to collect, store, analyze and interpret data about customers for the
development of more targeted and effective marketing campaigns. CRM is generally intended to
strengthen relationships with key customers, while improving the total customer experience over
time. It is not without its challenges, though.

Benefit 1: Improved profitability:

As with most business innovations, CRM is ultimately intended to drive revenue and increase
profitability for companies that use it. According to TechTarget, increased profitability is the goal of
using CRM to enable better targeting of top customers by sales and marketing departments. This
is the revenue-generating aspect of CRM. CRM is also intended to reduce costs by cutting down
on inefficient advertising to less desirable customers.
Benefit 2: Better customer relationships:
An underlying premise of CRM is analyzing customer data to continue to improve the customers'
experience with the organization. This should lead to stronger loyalty and better profits from core
customers. Using CRM database, or software solutions, employees are equipped with stronger
information about customers. This allows front-line sales and service employees to deliver on the
service attributes that customers expect while also helping marketers to build campaigns that sell
the desired value customers seek.

Challenge 1: Cross-organizational participation:

One of the greatest challenges of CRM is that a company-wide CRM program inherently involves
participation from members of departments across the entire organization. CRM programs are
typically developed and implement by cross-organizational teams with representation from each
functional department. This stimulates cooperation and communication, but putting this into
practice is difficult.
Challenge 2: Technology stigma:
One of the most often cited challenges for companies implementing CRM is the common
misconception that CRM is technology-driven or worse, that it is simply a technology. CRM is
supported by a technological infrastructure, including software solutions used to gather, analyze
and interpret customer data. However, these technological capabilities alone do nothing to make
companies successful.

Reasons for CRM failures:

No one undertakes a CRM implementation with the intention of failing. A little research turns up
CRM failure rates as high as 63%. There are 12 common problems that lead to CRM failures:
i. Lack of vision: A successful CRM implementation begins with clearly defined objectives.
ii. Poor planning: A formal strategy is a critical component of any successful CRM
implementation. Having a well-designed plan seems obvious, but lack of planning is often
cited as one of the top reasons for CRM failure.
iii. Scope creep: Gathering requirements, evaluating feedback, creating estimates, and
scheduling important project dates are all vital parts of the initial planning. With all the
moving parts and input from multiple sources, scope creep and analysis paralysis can set
in.
iv. Approaching CRM as a technology only solution: CRM is not strictly an IT project.
While software has become an integral part of successful CRM implementations, software
is merely a tool.
v. Too much at once: Trying to do everything at once guarantees that one won’t do any of it
well. It is end up with chaos and confusion rather than the more efficient business
processes imagined at the outset.
vi. Lack of user adoption: For any organization to enjoy the benefits of any new technology
offers, people have to use it. CRM is no different. Employees not using the system means
that not capturing data at key points in the customer cycle.
vii. Lack of training: Training is vital to the success of any CRM implementation strategy. It’s
unrealistic to force a new process or software application on sales team then expect them
to be productive right away without structured training.

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viii. Lack of support: All CRM software providers claim that their software is a snap to
configure and child’s play to use. But one can’t just fire up the software and start watching
his profits soar. There will be questions that need answers and issues that need resolving.
ix. Wrong technology vendor: One shouldn’t have to modify his business processes to fit
his software, but that’s precisely what some CRM software vendors force to do.
x. Overly complicated: In many organizations, the people who use the CRM system the
most are not technical people. If anyone chooses a program that the users don’t find
intuitive or simple to use, they’ll find ways to avoid it that will lose valuable data and
business will suffer.
xi. Lack of Measurable objectives: It’s important to define how one will measure success
before his project kicks off, but sometimes benchmarks get overlooked. It’s difficult if not
impossible to succeed with anything measuring.
xii. No executive buy-in: Having executive leadership establishes commitment and
encourages collaboration between departments. Without executive support, the project is
likely doomed from the start.

Trends in CRM/Types of CRM:

There are mainly four types of CRM applications-Operational, Analytical, Collaborative and Portal-
based to perform all these activities.
Operational CRM:
Operational CRM streamlines the business process that includes Sales automation, Marketing
automation and Service automation. Main purpose of this type of CRM is to generate leads,
convert them into contacts, capture all required details and provide service throughout customer
lifecycle. It supports customer interaction with greater convenience through a variety of channels
including phone, fax, e-mail, chat and mobile device. This type of CRM synchronizes customer
interactions consistently across all channels and makes the company easier to do business with.
Analytical CRM:
Analytical CRM helps top management, marketing, sales and support personnel to determine the
better way to serve customers. Data analysis is the main function of this type of CRM application.
It analyzes customer data, coming from various touch points, to get better insights about current
status of an organization. It helps top management to take better decision, marketing executives to
understand the campaign effectiveness, sales executives to increase sales and support personnel
to improve quality of support and build strong customer relationship.
Features of Analytical CRM:
 Extracts in-depth customer history, preference and profitability information from data
warehouse and other database;
 Allows to analyze, predict and derive customer value and behavior and forecast demand;
 Lets approach the customers with relevant information and offers that are tailored to their
needs.
Collaborative CRM:
Collaborative CRM, sometimes called as Strategic CRM, enables an organization to share
customers’ information among various business units like sales team, marketing team, technical
and support team. For example, feedback from a support team could be useful for marketing team
to approach targeted customers with specific products or services. In real world, each business
unit works as an independent group and rarely shares customers’ data with other teams that often
causes business losses. Collaborative CRM helps to unite all groups to aim only one goal – use all
information to improve the quality of customer service to gain loyalty and acquire new customers to
increase sales.
Portal-based CRM: It provides all users with the tools and information that fit their individual roles
and preference. This type of CRM empowers all employees to respond to customer demands
more quickly and become truly customers focus. It also provides the capability to instantly access,
link and use all internal and external customer information.

Different types of CRM applications have different features and advantages. So before
implementing CRM system, it is very much important for a business to decide future goal and
strategy.

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Topic: Enterprise Resource Planning (ERP):
ERP is the technological backbone of e-business, an enterprise-wise transaction framework with
links into sales order processing, inventory management and control, production and distribution
planning and finance. Enterprise resource planning is a cross functional enterprise system driven
by an integrated suite of software modules that supports the basic internal business processes of a
company. For example, ERP software for a manufacturing company will typically process the data
from and track the status of sales, inventory, shipping and invoicing as well as forecast raw
material and human resource requirements.
ERP gives a company an integrated real-time view of its core business processes, such as
production, order processing and inventory management tied together the ERP application
software and a common database maintained by a database management system. ERP systems
track business resources (such as cash, raw materials and production capacity) and the status of
commitments made by the business (such as customer orders, purchase orders, and employee
payroll), no matter which department (manufacturing, purchasing, sales, accounting etc.) has
entered the data into the system.

Benefit and Challenges of ERP:

ERP systems can generate significant business benefits for a company. Many other companies
have found major business value in their use of ERP in several basic ways:
Quality and Efficiency: ERP creates a framework for integrating and improving a company's
internal business processes that results in significant improvements in the quality and efficiency of
customer service, production and distribution.
Decreased Costs: Many companies report significant reductions in transaction processing costs
and hardware, software and IT support staff compared to the nonintegrated legacy systems that
were replaced by their new ERP systems.
Decision Support: ERP provides vital cross-functional information on business performance
quickly to managers to significantly improve their ability to make better decisions in a timely
manner across the entire business enterprise.
Enterprise Agility: Implementing ERP systems breaks down many former departmental and
functional walls or "silos" of business processes, information systems and information resources.
This results in more flexible organizational structures, managerial responsibilities and work roles,
and therefore a more agile and adaptive organization and workforce that can more easily capitalize
on new business opportunities.

There are some challenges that one needs to take into account before implementing an ERP
system.
 ERP vendors;
 Commitment from the top management;
 Adequate training;
 Implementation time;
 Proper project management;
 Implementation cost;
 Employee retention;
 Sufficient testing;
 Maintenance cost;
 Investment in internal hardware.
ERP has gained recognition because of competitive factors, such as an ever-increasing number of
mergers and globally aggressive rivals. A successfully planned and managed ERP system can
increase customer satisfaction and enhance employee productivity. It can adequately increase the
company profits with minimum resources.

The cost of ERP:

Many companies began using enterprise resource planning (ERP) systems rather than accounting
software applications. An ERP system differs from accounting systems in that accounting systems
only perform accounting-related tasks. An ERP system, however, can handle not only accounting
tasks, general business management tasks as well. Overall, it's a more powerful platform. 
An ERP system is essentially a suite of software packages that can perform accounting, product
planning and development, manufacturing, inventory management, sales management, human

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resources, and other business tasks. An ERP implementation is like the corporate equivalent of a
brain transplant. The major costs associated with ERP are as follows:
 Re-engineering;
 Hardware;
 Software
 Technical and change management
 Data conversion.

Causes of ERP failure:

Few people in an organization ever understand how difficult an ERP implementation is, and how a
few key elements can be the difference between ERP success and ERP failure. Listed below are
some of the common mistakes that, if avoided, can greatly improve the probability of success.
 Poor software fit/inaccurate requirements;
 Business leadership is not committed to the implementation;
 Insufficient team resources;
 Lack of accountability to make timely, high quality decisions;
 Lack of investment in change management;
 Insufficient training/support;
 Insufficient funding;
 Insufficient data cleansing;
 Insistence on making ERP look like legacy;
 Lack of testing.

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Topic: Supply chain management (SCM):
In commerce, supply chain management (SCM), the management of the flow of goods and
services involves the movement and storage of raw materials, work-in-process inventory and
finished goods from point of origin to point of consumption. Interconnected or interlinked networks,
channels and node businesses combine in the provision of products and services required by end
customers in a supply chain. Supply-chain management has been defined as the "design,
planning, execution, control and monitoring of supply chain activities with the objective of creating
net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing
supply with demand and measuring performance globally. SCM practice draws heavily from the
areas of industrial engineering, systems engineering, operations management, logistics,
procurement, information technology and marketing and strives for an integrated approach.
Marketing channels play an important role in supply chain management. Current research in
supply chain management is concerned with topics related to sustainability and risk management
among others. Some suggest that the “people dimension” of SCM, ethical issues, internal
integration, transparency/visibility, and human capital/talent management are topics that have, so
far, been underrepresented on the research agenda.

Supply chain management (SCM) strengthens the relationship of an organization with its suppliers
and buyers by developing better coordination. In today’s global market, more and more companies
are finding the need to collaborate to grow and expand. With this need, the scope of SCM is also
increasing. It is now becoming an effective tool to manage supply and suppliers, costs, inventory,
orders, returns and sales. Companies are using supply chain management’s tracking and
monitoring methods to develop better plans to maximize profits, minimize costs and strengthening
their supply chains.

Core Functions of SCM:

Even though primarily SCM is concerned with suppliers and the proper movement of raw material
into the organization, it is increasingly adopting areas that are crucial for customer satisfaction.
Some of the important functions of supply chain management are:
 Management of suppliers
 Management of Raw Material
 Transportation Management
 Information Management
 Tracking and Monitoring
 Cost Management
 Inventory Management
 Distribution and Return Management
 Management of Supply Chains
 Customer Satisfaction

Benefits and challenges of SCM:

When a company has an effective supply chain management in place, they have an immediate
competitive advantage over competitors in their industry. This allows businesses to decrease their
inherent risks when it comes to buying raw materials and selling products or services. By
implementing supply chain management systems, businesses are able to reduce waste and
overhead costs. There are many benefits to supply chain management and they are as follows:
 Higher efficiency rate;
 Inventory buffers;
 Optimal shipping options;
 Mitigate risks;
 Stay on top of demand;
 Eliminate waste;
 Minimize delays;
 Improve customer service;
 Reduce overhead costs.

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Supply chain managers have seen increasing challenges to create, and keep, efficient and
effective supply chain methods. Here we discuss five of the biggest supply chain challenges.
 Customer service;
 Cost control;
 Planning & risk management;
 Supplier/partner relationship management;
 Talent management.

Reasons of failures of SCM:

Supply chains can fail for any number of reasons. Many, such as a supplier that suddenly goes out
of business are often beyond the control of management. However there are some causes of
supply chain failure are as follows:
 Inefficient response to technology trends;
 Natural or environmental occurrences;
 Inaccurate planning and forecasting;
 Shifts in governmental regulations;
 Fluctuations in transport costs.

Electronic Data Interchange:

Electronic data interchange (EDI) is a direct computer-to-computer exchange of data. The data
found in business documents, such as purchase invoices or bills of lading are transmitted from one
computer to another over a telecommunication network. EDI is replacing the physical exchange of
documents and can save time and money by eliminating the need for rekeying data, thereby
reducing input errors, eliminating unnecessary handling and copying of documents and increasing
the productivity of employees. An EDI transaction is simply an exchange of flat files between
trading partners that have established a communication link.
In a word EDI can be defined as "The transfer of electronic data from one organization’s computer
to another, the data being structured in a commonly agreed format so that it is directly usable by
the receiving organization's computer system”. The message by the sender’s applications software
is translated into the agreed EDI format and placed on the network by the network access
software. This electronic data is sent to the mailbox facility of the EDI service provider. Here it is
stored until received by the retriever's network access software. Frequently, the services of a
value-added network (VAN) may also be required. EDI software may be implemented on a variety
of platforms, from PCs to mainframe computers such as Hewlett-Packard's HP 3000, DEC's VAX
6000 and IBM's AS/400 and ES/9000 mainframes.
EDI is not a new technology. It got its formal start in the transportation industry as early as 1975,
the grocery industry followed with an EDI project in 1978. Those are needed to implement EDI on
a PC is a modem, a printer and EDI software. In the simplest form of EDI, transactions are typed
directly into the PC and they can be printed at the other end. But the true power of EDI can be
achieved when EDI software is integrated with internal systems that handle only information
relating to manufacturing, marketing, accounting, finance and other functional areas.

Cost of Implementing EDI: The costs associated with implementing EDI fall into six general
areas: software, hardware, VAN charges, software Interface, program maintenance and process
reengineering. Some estimates of these costs are provided below: these costs can vary
significantly from one organization to the next.
Software: EDI software can range from $500 for PC to $100,000 for mainframes. Annual software
maintenance typically costs 10 percent to 15 percent of the purchase price;
Hardware: Costs vary depending on the type of computers used;
VAN Charges: Users should expect from $25 to $200 in VAN startup costs. Monthly fees of $3 to
$50 and use fees of 10 cents to 50 cents per 1,000 characters transmitted or received are usual in
the industry;
Software Interface: Integrating EDI software with existing applications can be expensive, because
it often requires the development of a customized interface. This is one of the primary reasons
smaller firms often reluctant to implement full-blown EDI systems;
Program Maintenance: These costs include software maintenance, technical support and
personnel training; they vary from one organization to another;

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Organizational Changes: A significant (and sometimes hidden) cost of EDI implementation is the
change that it creates in an organization. Quite often these changes raise the fundamental
question, "Why do we do business the way we do?" The answers may lead to significant (and
costly) organizational changes and such costs are difficult to estimate.

Benefits of EDI: EDI is a powerful technology because it can create partnerships where none
existed and can replace sluggish bureaucracies with responsive organizations. It is one of the
most successful efforts in recent years to reduce operating costs and increase worker productivity.
In some cases, it has changed the relationship between suppliers and customers from one of
caution and mistrust to one of cooperation and collaboration. EDI is so powerful that it is viewed as
a glue technology that binds businesses together in the value chain from raw materials to finished
products.
The benefits of EDI may be divided into three groups: direct, indirect and strategic. Direct benefits
include decreased operating costs and increased productivity. Indirect benefit comes from using
EDI to re-engineer business practices. EDI enables businesses to identify and implement the most
efficient way to conduct business. Finally EDI can yield strategic benefits in the marketplace.
Further more EDI ensures:
 The speed, with which an inter-organizational transaction is processed, is minimized;
 The paperwork of transaction processing is eliminated;
 The costs of transaction processing are reduced, as much of the need for human
interpretation and processing is removed;
 Reduced human involvement and reduces error.

The end

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