Chapter 8

Enterprise Business
Systems
Section I:
Getting All the Geese Line Up: Managing
at the Enterprise Level
Section II:
Enterprise Resource Planning: The
Business Backbone
Section III:
Supply Chain Management: The
Business Network 2-1
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

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Learning Objectives
 Understand the importance of managing at the
enterprise level to achieve maximum
efficiencies and benefits.

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 SOURCE: © Royalty-Free/Corbis.

FIGURE 8.1
Geese fly in a highly organized and efficient V-shaped formation—much like a well-
run business.
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Getting All the Geese Lined Up:
Managing at the Enterprise Business
Level
 Customer Relationship Management,
Enterprise Resource Planning, and Supply Chain
Management all share the same Goal: to get
the organization to line up and head in the
same direction (like geese).

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 Section 1
Customer Relationship Management:
The Business Focus

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I. Introduction

Businesses today must be

Customer-centric/Customer-focused –
Customer, Customer, Customer!

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II. What Is CRM?

 Customer relationship management (CRM) is

an organizational strategy that is customer-
focused and customer-driven.

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II. What Is CRM?

 Providing the organization with a single

complete view of every customer, and
providing the customer with a single complete
view of the organization and its extended
channels
 Contact and Account Management – capture
and track relevant data about past and
planned contacts

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II. What Is CRM?

Sales – providing software tools and data

sources to manage sales activities, and
optimize cross-selling and up-selling

Cross-selling – selling related products to

current customers
Up-selling – selling better products than the one
currently purchased

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II. What Is CRM?

Marketing and Fulfillment – automate

direct marketing, scheduling, and tracking,
and assist in scheduling responses and
requests, while capturing relevant
information for the marketing database

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II. What Is CRM?

Customer Service and Support – provide

customer service software tools, and real-
time access to the customer database

Call Center Software – routes calls to customer

support agents
Help Desk Software – provides assistance for
customer service agents having problems with a
product/service

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II. What Is CRM?
 Retention and Loyalty Programs – enhancing and
optimizing customer retention and loyalty is a
major business strategy.

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The Need for CRM
 It costs six times more to sell to a new customer than
to sell to an existing one.
 A typical dissatisfied customer will tell 8-10 people.
 By increasing the customer retention rate by 5%,
profits could increase by 85%.
 Odds of selling to new customers = 15%, compared
to the odds of selling to existing customers (50%)
 70% of complaining customers will remain loyal if
their problem is solved

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The Need for CRM
Tenets of CRM
 One-to-one relationship between a customer and a seller.
 Treat different customers differently.
 Keep profitable customers and maximize lifetime revenue from
them.

Lifetime Customer Value

The value of a customer to a company depends on three dimensions:
 the duration of the relationship,
 the number of relationships (e.g., the number of products from
a company that a customer purchases), and
 the profitability of the relationship.

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The Need for CRM

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Customer Touch Points

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III. The Three Phases of CRM
Acquire – CRM helps a new customer
perceive value of a superior product/service
Enhance – CRM supports superior customer
service, and cross-selling/up-selling
Retain – CRM helps proactively identify and
reward the most loyal and profitable
customers

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IV. Benefits and Challenges of CRM
CRM helps identify and reward the best
customers

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V. CRM Failures
 Although over 70% of firms plan to implement
CRM, over 50% of CRM projects fail to produce
promised results due to:
 Lack of senior management sponsorship
 Improper change management
 Projects take on too much too fast
 Poor integration between CRM and core business
systems
 Lack of end-user incentives leading to low user
adoption rates

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VI. Trends in CRM
 Firms must create tighter linkages with
customers while enhancing the customer
experience
 Operational CRM – supports/synchronizes
customer interactions
 Analytical CRM – extracts customer information
and predicts customer behavior
 Collaborative CRM – enables collaboration with
customers, suppliers, and business partners
 Portal-Based CRM – enables access to customer
information and CRM tools

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Operational CRM
Operational CRM is the component of CRM that
supports the front-office business processes.
That is, those processes that directly interact
with customers; i.e., sales, marketing, and
service.

Two major components of operational CRM

 Customer-facing applications
 Customer-touching applications

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Customer-facing Applications
Customer-facing applications are those applications
where an organization’s sales, field service, and customer
interaction centre representatives actually interact with
customers.
• Customer service and support refers to
systems that automate requests, complaints,
product returns, and requests for information.
– Customer Interaction Centre (CIC)
• Call centre
• Outbound telesales
• Inbound teleservice

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Customer-facing Applications
• Sales force automation automatically records
all the aspects in a sales transaction process.
 Contact management system
 Sales lead tracking system
 Sales forecasting system
 Product knowledge system
 Configurators

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Customer-facing Applications
 Marketing
 Cross selling is the practice of marketing additional, related products
to customers based on their previous purchases.
 Up selling is a sales strategy in which the sales person will provide
customers the opportunity to purchase higher-value related
products or services as opposed to, or along with, the consumer’s
initial product or service selection.
 Bundling is a form of cross selling in which a business sells a group of
products or services together at a price that is lower than the
combined individual prices of the products.
 Campaign management applications help
organizations plan campaigns so that the right
messages are sent to the right people through the
right channels.

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Customer-Touching Applications
In customer-touching applications, customers interact
directly with online technologies and applications rather
than interact with a company representative.
 Search and Comparison Capabilities
 Technical and Other Information and Services
 Customized Products and Services
 Personalized web pages
 FAQs
 E-mail and Automated Response
 Loyalty Programs

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Analytical CRM Systems
Analytical CRM systems analyse customer behaviour and
perceptions in order to provide actionable business
intelligence.
Analytical CRM systems analyse customer data for a
variety of purposes, including:
 Designing and executing targeted marketing
campaigns
 Increasing customer acquisition, cross selling, and up
selling
 Providing input into decisions relating to products and
services (e.g., pricing and product development)
 Providing financial forecasting and customer
profitability analysis
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Analytical CRM Systems

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 Section 2
Enterprise Resource Planning:
The Business Backbone

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I. Introduction
ERP is a multifunctional enterprisewide
backbone that integrates/automates
business processes and information
systems

II. What is ERP?

A cross-functional software suite
supporting basic internal business
processes of a firm

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III. Benefits and Challenges of ERP
 Major Business Value from ERP

Quality and Efficiency – significant improvements

in quality and efficiency of customer service,
production, and distribution
Decreased Costs – significant reductions in
transaction costs, hardware and software, and IT
support staff
Decision Support – provides cross-functional
information that enables better decision making
across the enterprise
Enterprise Agility – breaks down
departmental/functional walls and enables more
flexible, adaptive organizational structures
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III. Benefits and Challenges of ERP

Costs of ERP – if you do not do ERP properly

you can kill the firm
Causes of ERP Failures
Underestimating the complexity of planning,
development, and training necessary for success
Failure to involve affected employees
Trying to do too much too fast
Overreliance on claims of software
vendors/consulting firms
The failure to perform proper data conversion
and testing for the new system
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IV. Trends in ERP
Improvements in Integration and Flexibility
– ERP modules have become more flexible
and easier to install
Extensions to Business Applications – access
to intranets/extranets
Broader Reach to New Users – use of the
Internet, intranets and extranets provides
new links to customers, suppliers, and
partners
Adoption of Internet Technologies –enables
all the above
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Implementing ERP Systems
On-Premise ERP Implementation
 Vanilla approach
 Custom approach
 Best of breed approach

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Software-as-a-Service ERP
Implementation
Three major advantages of using a cloud-based ERP
system are:
 The system can be used from any location that
provides Internet access
 Companies using cloud-based ERP avoid the initial
hardware and software expenses that are typical of
on-premise implementations
 Cloud-based ERP solutions are scalable, meaning it is
possible to extend ERP support to new business
processes and new business partners (e.g., suppliers)
by purchasing new ERP modules.

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Software-as-a-Service ERP
Implementation
Three major disadvantages of using cloud-based ERP
systems are:
 It is not clear whether cloud-based ERP systems are
more secure than on-premise systems
 Companies that adopt cloud-based ERP systems
sacrifice their control over a strategic IT resource
 Lack of control over IT resources when the ERP system
experiences problems

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 Section 3
Supply Chain Management:
The Business Network

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 I. Introduction

 Successful SCM is based on accurate order

processing, JIT inventory management, and
timely order fulfillment; this was theoretical 10
years ago, but is now a competitive weapon

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 II. What is SCM?

 A cross-functional inter-enterprise system

using IT to support/manage links between key
business processes and suppliers, customers,
and business partners

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 III. The Role of SCM
• To optimize the effective/efficient movement of
materials between suppliers, customers, and other
partners
• Supply chain: refers to the flow of materials,
information, money, and services from raw material
suppliers, through factories and warehouses, to the
end consumers.
 Upstream component of a supply chain: sourcing or
procurement takes place.
 Internal component of a supply chain: packaging, assembly,
or manufacturing takes place.
 Downstream component of a supply chain: distribution takes
place.

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Generic Supply Chain

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 The Flows of the Supply Chain
• Material flows are the physical products, raw
materials, supplies and so forth that flow along the
chain.
• Information flows are all data related to demand,
shipments, orders, returns and schedules as well as
changes in any of these data.
• Financial flows are all transfers of money, payments
and credit-related data.

A supply chain involves a product life cycle approach,

from “dirt to dust”.

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 Supply Chain Management

 Supply chain management (SCM) is the

function of planning, organizing and optimizing
the supply chain’s activities.

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Supply Chain Management

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 IV. Benefits and Challenges of SCM

 SCM solutions are becoming more complex

 Benefits:
Faster, More Accurate Order Processing
Reductions in Inventory Levels
Quicker Times to Market
Lower Transaction and Materials Costs
Strategic Relationships with Suppliers

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 IV. Benefits and Challenges of SCM

 Challenges – SCM Failures Caused By:

 Lack of Knowledge about Demand Planning

 Inaccurate/Overly Optimistic Demand Forecasts
 Inaccurate Production, Inventory, and Other
Business Data
 Lack of Adequate Collaboration Among Marketing,
Production, and Inventory Management
Departments

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 Solutions to Supply Chain Problems

 Using inventories
 Just-in-time inventory: sebuah sistem di mana
pemasok memberikan jumlah bagian yang tepat
untuk dirakit menjadi produk jadi pada waktu yang
tepat.
 Information sharing
 Vendor-managed inventory: strategi inventaris di
mana pemasok memonitor Inventaris vendor untuk
produk atau kelompok produk dan mengisi ulang
produk bila diperlukan.

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 Solutions to Supply Chain Problems

 Electronic Data Interchange (EDI) adalah

standar komunikasi yang memungkinkan mitra
bisnis untuk menukar dokumen rutin, seperti
pesanan pembelian, secara elektronik.
 Extranets menghubungkan mitra bisnis satu
sama lain melalui Internet dengan
menyediakan akses ke area inti intranet
korporat masing-masing.

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 Electronic Data Interchange
EDI Benefits
 Minimize data entry errors
 Length of messages are shorter
 Messages are secured
 Reduces cycle time
 Increases productivity
 Enhances customer service
 Minimizes paper usage and storage

EDI Limitations
 Significant initial investment to implement
 Ongoing operating costs are high due to the use of expensive, private
VANs
 Traditional EDI system is inflexible
 Long start-up period
 Multiple EDI standards exist
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 Electronic Data Interchange
Comparing Purchase Order Fulfilment Without EDI

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 Electronic Data Interchange
Comparing Purchase Order Fulfilment With EDI

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THANK YOU 

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