Minder Chen, PH.D.: Information Technology and Business

ERP & SCM & CRM
Information Technology and Business
Minder Chen, Ph.D.

Minder.chen@csuci.edu
Martinique Landscape, Paul Gauguin

E-Business - 1
© Minder Chen, 1996-2005
The Extended Enterprise
Buy Make/Add Value Sell
Back Front Customers

Suppliers Office Office
E-Business: Virtual and Dynamic Enterprise

Manufacturing Sales
Finance, HR Support/Service
Engineering Marketing
Supply Chain Back Office Integration Demand Chain
Supply Chain Management Customer Relationship Management

Enterprise Resource Planning
© E-Business - 2
© Minder
MinderChen,
Chen,2001-2002
1996-2005
A Federation of Information Systems
B2C
B2B
Customer Relationship Management (CRM)

(Service)
B2B
E-Business - 3
ERP
Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport
E-Business - 4
ERP Market
• One of the fastest growing markets in software
industry
• 34.5% of companies with revenues over $1
billion plan to purchase or upgrade
• $180 billion in sales in 2002
• Maybe as much as $1 trillion by 2010
E-Business - 5
ERP Systems
• Major investment
– Cost between $50,000 and $100,000,000+
• Variety of business justifications
– Replace legacy systems
– Reduce cycle times
– Lower operating costs
– Enables better management decisions
» Real-time
» On-line
E-Business - 6
What is ERP?
• Software application packages
• Manage business processes and functions
– Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting,
HR
• Allow automation and integration of business
processes
• Enable data and information sharing
• Enterprise-wide system
• Introduces “best practices”
E-Business - 7
Evolution of ERP
• 1960s: software packages with inventory
control
• 1970s: MRP systems
– Production schedule with materials management
• 1980s: MRPII systems
– Adds financial accounting system
• 1990s: MRPII
– Integrated systems for manufacturing execution
• Late 1990s: ERP
– Integrated manufacturing with supply chain
• Late 1990s and 200X: SCM & CRM
E-Business - 8
Integrated Systems Approach
• Common set of applications/modules
• Usually requires the reengineering business
processes according to ERP package’s
underlying business model (reference model)
– Better alignment
• Limit your customization
– Easier during version upgrades
• Overcomes inefficiencies of independent
systems
• Integrated data supports multiple business
functions
E-Business - 9
Major Vendors
• Microsoft Dynamics
– http://www.microsoft.com/dynamics/default.mspx
– http://www.microsoft.com/dynamics/product/experience.mspx#EWC
– http://www.microsoft.com/dynamics/ax/product/demos.mspx
• Oracle e-Business Suite
– PeopleSoft
• SAP
– SAP Business One http://en.wikipedia.org/wiki/SAP_Business_One
– http://www.sap.com/solutions/business-suite/erp/demos/index.epx
http://en.wikipedia.org/wiki/List_of_ERP_vendors
http://panorama-consulting.com/resource-center/2010-erp-vendor-analysis/
E-Business - 10
Major Vendors
• Salesforce.com
– Software as a service (SaaS)
– http://www.salesforce.com
• NetSuite
– http://www.netsuite.com/portal/home.shtml
– http://www.netsuite.com/portal/resource/edemo_main.shtml
• QuickBooks
– http://quickbooks.intuit.com/index.jsp
• Microsoft Accounting Express
– http://office.microsoft.com/en-us/accountingexpress/default.aspx
E-Business - 11
ERP Market Share
Sample Vendors
Tier I Tier II Tier IIII
ABAS
Activant Solutions Inc.
Epicor Bowen and Groves
SAP
Sage Compiere
Oracle
Infor Exact
Oracle eBusiness Suite
IFS NetSuite
Oracle JD Edwards
QAD Visibility
Oracle Peoplesoft
Lawson CGS
Misrosoft Dynamics
CDC Software Hansa World
Consona
Syspro
http://whatiserp.net/erp-comparison/erp-vendor-evaluation-2010/
E-Business - 12
/ Web-enabled architecture
E-Business - 13
The Basic Instance of SAP
E-Business - 14
Candidate HR Instance of SAP
E-Business - 15
Sap modules
E-Business - 16
ERP: Business Processes Overview
Financial Controlling
Cost Controlling
Sales Sales order

Initial Customer Inventory Customer
order Sourcing Delivery Invoicing
Contact payment
Production Planned Prod. Prod.

SOP MPS MRP control
order order
Purchasing Purchase Vendor Goods Invoice

Purch . Vendor
requisite. selection order issue verificat. payment
Logistics Controlling Sales, Production, Purch., Warehouse Mgmt
SOP: Sales and Operations Planning MPS: Master Production Schedule;

MRP: Material Requirements Planning

http://134.198.33.115/sap/1000.htm
E-Business - 17
R/3 Logistics Process Flow
E-Business - 18
Collaborative Business Map
E-Business - 19
E-Business Building Blocks
E-Business - 20
The Flow of Your Implementation Process
Define
Define & build
project Install Tune system
technical
scope & software performance
infrastructures
organization
Perform Build and

Train project Convert Develop
fit/gap test
team data interfaces
analysis prototypes
Support
Perform Go system Evolve
testing live after system
conversion
Create end-user
procedures
documentation &
training
Please also refer to for Selection ERP Software

http://en.wikipedia.org/wiki/ERP_System_Selection_Methodology
E-Business - 21
Commercial Application Package Implementation Strategy
• Commercial application package – a software application that
can be purchased and customized to meet the business
requirements of a large number of organizations or a
specific industry. A synonym is commercial off-the-shelf
(COTS) system.
– Request for proposal (RFP) – a formal document that communicates
business, technical, and support requirements for an application
software package to vendors that may wish to compete for the sale
of that application package and services.
– Request for quotation (RFQ) – a formal document that communicates
business, technical, and support requirements for an application
software package to a single vendor that has been determined as
being able to supply that application package and services.
– Gap analysis – a comparison of business and technical
requirements for a commercial application package against the
capabilities and features of a specific commercial application
package for the purpose of defining the requirements that cannot
be met.
E-Business - 22
Implementation Success Factors
• Understand your business objectives
• Assemble a dedicated project team with the
appropriate skills
• Recognize and capitalize on re-engineering
opportunities
• Leverage the experience of others
• Understand the system’s capabilities
E-Business - 23
Implementation Success Factors
• Explore new technology solutions
• Execute your implementation In phases
• Customize by prototyping
• Maintain a close relationship with your vendors
• Follow a proven formula
E-Business - 24
Benefits achieved by organizations
2 Improved financial management
5 Faster, more accurate transactions
1 Better managerial decision making

8 Improved inventory & asset mgt
4 Ease of expansion & incr. flexibility
9 Improved logistics
7 Cycle time reduction
3 Improved customer service
6 Headcount reduction
10 Increased revenue
E-Business - 25
Maximizing Benefits from Enterprise Systems
Distinctive Evolutionary Spiral of PEAS &
Characteristics Process Change and Management Net Benefits
of Packaged Initiatives from ES Use
Enterprise
Application Another cycle of ES Customize
Exploration, the package
Software Redesign and Use
(PEAS)
Packaged Achieving Fit between PEAS and Business needs Operational

Software Benefits
Assess and
Features Changes
Explore PEAS Managerial
to PEAS
Agree on Benefits
Gap Redesigned
Evolving Processes Changes Strategic
Functionality Assess and
to Benefits
Explore
Process
Processes IT infrastructure
Sophisticated Benefits
Knowledge
Initiatives to Organizational
Monitor Changing
Manage the Benefits
Conditions &
Application Reevaluate Distinctive
Infrastructure Benefits Characteristics of
Use ES to the PEA Software
Generate Reengineer
Benefits processes
Source: E-Business - 26
http://www.dis.unimelb.edu.au/staff/peter/615-260webraft/pub/index.html
When, in the years after "go live", are net benefits realized?
• One of the most consistent findings reported in the literature is

that there is a dip in organizational performance in the six to
twelve months after "go live".
Ross & Vitale Transformation

(1998)
Continuous
Improvement
Design
Stabilization
Implementation
• A possible explanation for the above pattern is

organizational learning, the time taken for
people in the organization to really understand
their role in the new processes.
E-Business - 27
Why do benefits and problems occur in the years after "go live"?
Factors that might explain why benefits and

problems occur after go live:
1. Poor project management including poor design-

stage decisions during the implementation project
2. Inappropriate software choice and configuration,
resulting in poor fit
3. Lack of knowledge on part of implementation team
and users
4. Poor change management
E-Business - 28
SCOR Reference Model
The Supply Chain Council (SCC) developed a Supply Chain Operations Reference Model (SCOR) as
a cross-industry process reference model for supply chain management.
E-Business - 29
Supply Chain Management
Procurement
E-Business - 30
A Case Study
• Used CNET.com for reviews and vendors list of
a Tablet PC via
• Called BestBuy government and education sale
• Confirmed order
• Later told that they it did not have it in stock at
the promised delivery date.
• Order cancelled but then shipped by UPS
without obtaining a signiture.
• Took two days to get authorized return
• Ordered from another vendor, and shipped by
FedEx, missed the delivery, went to FedEx
station to pickup
E-Business - 31
Fulfillment by Amazon
• http://www.amazonservices.com/content/fulfill
ment-by-amazon.htm#how-it-works
E-Business - 32
Bullwhip Effect in Supply Chain
E-Business - 33
Demand-Driven Supply Chain
SCM ERP CRM
E-Business - 34
Increasing Variability of Orders up the Supply Chain
The Bullwhip Effect in Supply Chains, Hau L. Lee, V. Padmanabhan and Seungjin Whang, Sloan Management Review, April 15, 1997
E-Business - 35
Higher Variability in Orders from Dealer to Manufacturer than Actual Sales
E-Business - 36
Bullwhip Effect due to Seasonal Sales of Soup
E-Business - 37
A Framework for Supply Chain Coordination Initiatives
E-Business - 38
B2B Data Exchange: Existing Methods - EDI messages
• UN standard format (EDIFACT) or X.12
• Compact strings, with numeric qualifiers. Strict limitation on the
number of characters and position of data in a document.
• Example:
• UNH+900576+ORDERS:D:93A:UN:EAN007’BGM+220+H940568’DTM
+137:19940201:102’
NAD+BY+5412345000176::9’NAD+SU+4012345000094::9’LIN+2’PIA
+5_1857990455:IB’
IMD+F+BAU+:::Farell J G’IMD+F+BTI+:::The Singapore
Grip’QTY+21:1’
PRI+XXX:7.99’UNS+S’CNT+2:2’UNT+15+900576’
• Rules for data type control
E-Business - 39
XML
eXtensible Markup Language
E-Business - 40
EDI and XML
EDI
VAN
EDI EDI
XML XML
E-Business - 41
BizTalk
E-Business - 42
E-Business Integration Imperatives
SouthWest.com
Internet /
Virtual Private B2C
Network
Trading Partners
Suppliers Consumers
Distributors B2B
Business Partners
Integration
Dollars.com
REQUIREMENTS
Standards based integration EAI
Configurable across applications Heterogeneous Platforms
Business process oriented ERP Application Packages
Loosely coupled Proprietary Applications
Supports an incremental approach Legacy Applications
Scaleable, available, secure, manageable
E-Business - 43
e-Procurement Case Study
eProcurement
User Interface Subsystem
eProcurement
(Web Interface)
Application
eProcurement
(Windows Interface)
Application
(Mobile Interface)
Public
UDDI
Repository
eProcurement Management
Agent Subsystem
(implemented in Web
Services)
Internet
Web Services
Repository Interfaces
Web Services
Provided by supplier N
Web Services
Procurement Provided by supplier …
Web Services
Web services Provided by supplier 1
Registry
E-Business - 44
Data Model of the Private
Web Services Registry
E-Business - 45
E-Business - 46
Prototype
E-Business - 47
Customer Relationship Management (CRM)
The measures an organization takes to

– identify,
– select,
– acquire,
– work with, and
– retain
its customers
E-Business - 48
Objectives of CRM
• The right offer (products or services)
• To the right person (target marketing)
• At the right time (spacing outbound calls)
• Through the right channel (direct vs. channel)
• Via appropriate media (phone, email, Web)
E-Business - 49
Highest Level Business Flow
Source: Oracle.
E-Business - 50
CRM Framework
Key Events
The Moment of Truth (MOT)
==
KPI and continuously improvement
E-Business - 51
RFM and LTV
• Recency - How recently a customer has
purchased?
• Frequency - How often he purchases?
• Monetary Value - How much does she spend?
Source: http://en.wikipedia.org/wiki/RFM and http://www.jimnovo.com/RFM-
tour.htm
• Life Time Value(LTV) or Lifetime Customer

Value (LCV)
Source: http://en.wikipedia.org/wiki/Customer_lifetime_value
http://www.jimnovo.com/LTV.htm
E-Business - 52
CRM Architecture
E-Business - 53
Digital Dashboard for Sales Process
Convert leads into Manage customer

Manage the follow-up customers relationships
process Update deal Acquire deep knowledge
Log calls, send emails, information, track of every account,
Capture leads
from your Web site and update the status opportunity facilitate collaboration,
of your leads so that milestones, and record and build and maintain
Prospects fill out a all opportunity-related strong, lasting customer
People click on you never miss an
Web form, which interactions. relationships.
your ad opportunity.
creates a lead in
When people search Salesforce that is
on Google, your ad is routed to your sales
displayed and traffic team.
Advertise your is driven to your site.
business on Google
Take five minutes
to write your ad
and select a couple
keywords—even target
your ad locally.
E-Business - 54
Close More Deals
Close deals faster by providing a single place for updating deal information, tracking opportunity milestones, and recording interactions.
Easily analyze your sales pipeline so you can quickly identify and eliminate any bottlenecks in the sales cycle.
Top 10 Deals Month-to-Date Trending Closed Business by Month Top Sales Reps
Sales
Marketing
Open Opportunities Presentation Proposal Negotiation Won

Yes
You can monitor Customize Salesforce to fit your No
New Customers Support
your opportunities internal sales methodologies and
reports and processes, making it easier to Salesforce gives your entire
dashboards to keep monitor your sales pipeline. company a 360-degree view of
track of your top Keep an archive of your dead opportunities. your customers and facilitates
deals and prioritize collaboration across your
your time. Use email marketing and call organization, helping you build
downs to re-market to your strong, lasting customer
archived opportunities. relationships.
ERP, CRM, SCM Implementation
Software
• Package (proprietary or open source)
• Hosting Solution (SaaS)
• Custom-build
Staffing
• In house staff
• Systems integration/Consulting firm
• Onsite / onshore / near shore/ offshore
outsourcing
• Reshoring
E-Business - 56
Classification of Outsourcing: Service Types
• Manufacturing Outsourcing
– FoxConn’s eCMMS stands for e-enabled
Components, Modules, Moves and Services
– TSMC emphasizes collaborative services*
• Information Technology Outsourcing
• Business Process Outsourcing
• Knowledge Processing Outsourcing
• Innovation Outsourcing
Smart sourcing: Beyond “lift and shift”.

*See http://www.tsmc.com/english/c_services/c00_Service_Guide/c0100_Service_Guide.htm
E-Business - 57
Backup Slides
E-Business - 58
A Taxonomy for
System
Development
Methodologies &
Strategies
E-Business - 59
Commercial Application Package Implementation Strategy
E-Business - 60
Procurement Tasks
Materials
Planning
External Procurement Internal Procurement

Purchasing Production
Invoice Verification Master Data

Inventory Management
Material
Goods Batches
Issue
Vendors
Invoice G/L accounts
Receipt Goods Receipt Transfer Storage bins
Posting
Internal and External Sales and

R
Accounting Distribution
E-Business - 61
SAP pursues a global purchasing strategy
E-Business - 62
http://upload.wikimedia.org/wikipedia/en/6/6a/Manufacturating_Resource_Planning.jpg
E-Business - 63
Strategy Multi-channel Performance
Value Creation
Development Integration Assessment
Process Process Process Process
Information Management Process
E-Business - 64
E-Business - 65

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ERP & SCM & CRM

Information Technology and Business

Minder Chen, Ph.D.

Martinique Landscape, Paul Gauguin

Buy Make/Add Value Sell

Back Front Customers

E-Business: Virtual and Dynamic Enterprise

Supply Chain Back Office Integration Demand Chain

Supply Chain Management Customer Relationship Management

Customer Relationship Management (CRM)

Sales Sales order

Production Planned Prod. Prod.

Purchasing Purchase Vendor Goods Invoice

Logistics Controlling Sales, Production, Purch., Warehouse Mgmt

SOP: Sales and Operations Planning MPS: Master Production Schedule;

© Minder Chen, 1996-2005

Perform Build and

Please also refer to for Selection ERP Software

2 Improved financial management

5 Faster, more accurate transactions

1 Better managerial decision making

Packaged Achieving Fit between PEAS and Business needs Operational

• One of the most consistent findings reported in the literature is

Ross & Vitale Transformation

• A possible explanation for the above pattern is

Factors that might explain why benefits and

1. Poor project management including poor design-

The measures an organization takes to

• Life Time Value(LTV) or Lifetime Customer

Convert leads into Manage customer

Open Opportunities Presentation Proposal Negotiation Won

Smart sourcing: Beyond “lift and shift”.

External Procurement Internal Procurement

Invoice Verification Master Data

Internal and External Sales and

Information Management Process

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