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Competitive Lecture Advantage with IS within an Organization
Objectives
Gain competitive advantages from using IS inside the organization Three fundamental types of information systems within organizations Basic types of functional systems Problems of functional systems Integrated, Cross-functional systems Enterprise Resource Planning (ERP) Customer Relationship Management (CRM)
Achieving Competitive Advantage
Business determines its strategies Create business processes to achieve its strategies IS developed to support business processes
Help organizations achieve competitive advantage Need to avoid creating systems that are unrelated to organization's strategies
Fundamental Types of IS within Organization
Calculation systems Functional systems Cross-functional systems
Calculation Systems
Relieved workers of repetitive calculations Labor-saving devices Produced little information Examples: systems that compute payroll and prepare paychecks
Functional Systems
Facilitates work of single department or function Functions added to calculation system programs to provide more value Examples: human resources; financial reporting
Functional Systems Problems
Systems provide tremendous benefits, but are limited because they operate in isolation
Data duplication results from each application having own database
Potential lack of data integrity
Business processes disjointed across functions
Produces lack of integrated enterprise information
Increased costs to organization
Integrated, Cross-Functional Systems
Cross-functional systems designed to overcome problems in functional systems Process-based systems support complete business processes
Integrated processing systems are more efficient
Integrated, Cross-Functional Systems
Enterprise Resource Planning (ERP)
Enterprise-wide systems Integrates value chain activities
Customer Relationship Management (CRM)
Makes the organization customer-centric
Business Process Improvement
Focus on work being done to create optimal value for the business When employees gain business process, hopefully, they begin to analyze and improve processes
Question status quo Don't accept "because we have always done it that way" as an answer to why business is done in a particular way
Business Process Improvement
Companies are forced to improve their business processes because customers are demanding better products and services
Business Process Improvement
Redesign business processes to improve them IS will be very useful for business process redesign
IS should support linkages across departments and activities
Challenges of Business Process Redesign
Projects expensive and difficult
Review and analyze the existing process; then, develop new process New IS developed Take time Underlying assumptions may change
Outcome uncertain Employees resist change
Enterprise Resource Planning (ERP)
Enterprise-wide Cross-departmental systems
A cross-functional enterprise backbone that integrates and automates many internal business processes within various functional areas Supporting linkage and flow of value chain activities and information for business process Back office automation systems
Enterprise Resource Planning (ERP)
Best Practice - based on documented, tested business processes from wellknown and successful companies (inherent business process)
Enterprise Resource Planning (ERP)
At the heart of ERP system is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system
Enterprise Resource Planning (ERP)
ERP systems automate business processes
Core and Extended ERP Components
Core ERP components traditional components included in most ERP systems and they primarily focus on internal operations Extended ERP components extra components that meet the organizational needs not covered by the core components
Core and Extended ERP Components
Core Components
Accounting ERP and Finance ERP component manage accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management
Core ERP Components
Production and Materials Management ERP components handle the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control
Core ERP Components
Human Resource ERP components track employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities
Extended ERP Components
E-business components include e-logistics and e-procurement
E-logistics manages the transportation and storage of goods E-procurement the purchase of supplies and services over the Internet
Benefits of ERP
Benefits:
Processes effective and efficient organizations do not need to reinvent processes No data inconsistency problem
Costs of ERP
Adoption Decision
Sometimes it is inappropriate to let the enterprise system drive business process redesign
When changing processes that are relied upon for strategic advantage When there is a lack of top management support
Customer Relationship Management (CRM)
Today, customers are in charge It is easy for them to comparison shop and switch companies Thus, business must emphasize on customerfocused or customer centric strategy
Customer Relationship Management (CRM)
Help a company become more customerfocused business Involve managing all aspects of a customer's relationship with an organization to increase:
Customer loyalty Retention Company's profitability
Encompass every customer touch point
Marketing CRM
List generator compiles customer information from a variety of sources; then filter, sort, and segment (based on income, education level, etc.) the information for different campaigns Campaign management guides users through marketing campaigns (e.g., campaign definition, planning, scheduling, success analysis, calculating ROI, tracking results)
Marketing CRM
Cross-selling and up-selling
Cross-selling selling additional products or services (e.g., swimming suit and sunscreen lotion) Up-selling increasing the value of the sale (e.g., supersize meal)
Sales CRM
Sales Management automates each phase of the sales process, helping individual sales representatives coordinate and organize all of their accounts (e.g., calendar for customer meetings, alarm reminders, customizable multimedia presentations, document generation)
Sales CRM
Contact management maintain customer contact information (e.g., take incoming phone number and display caller's name along with notes detailing previous conversations) Opportunity management target sales opportunities by finding new customers or companies for future sales (e.g., calculate probability of sale, define selling efforts budget and schedule)
Customer Service CRM
Contact center (or Call center) representatives answer customer inquiries and respond to problems (e.g., tracking call history with problem resolutions, emotion-detection software) Web-based self-service allow customers to use the Web to find answers to their questions or solutions to their problems, including click-to-talk feature
Customer Service CRM
Call scripting
providing a list of questions that representatives can ask the customer to determine the potential problem and resolution accessing database that track similar issues or questions and automatically generate details for representatives
Customer Relationship Management (CRM)
Customer retention and loyalty
six times more expensive selling to a new customer than to the existing customers Dissatisfied customer will tell 8 - 10 people 70% complaining customers will come back if the problems are quickly taken care
Forecast for CRM Spending (in billions)