Lecture6 - Lecture 6 Competitive Advantage with IS within...

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Unformatted text preview: Lecture 6 Competitive 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, Crossfunctional 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 Crossfunctional systems Calculation Systems Relieved workers of repetitive calculations Laborsaving 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 Increased costs to organization Produces lack of integrated enterprise information Integrated, CrossFunctional Systems Crossfunctional systems designed to overcome problems in functional systems Processbased systems support complete business processes Integrated processing systems are more efficient Integrated, CrossFunctional Systems Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) Enterprisewide systems Integrates value chain activities Makes the organization customercentric 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 Outcome uncertain Review and analyze the existing process; then, develop new process New IS developed Take time Underlying assumptions may change Employees resist change Enterprise Resource Planning (ERP) Enterprisewide Crossdepartmental systems A crossfunctional 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 well known 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 ERP Components Accounting 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 Ebusiness components include e logistics and eprocurement Elogistics manages the transportation and storage of goods Eprocurement 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 customer focused 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 Crossselling and upselling Crossselling selling additional products or services (e.g., swimming suit and sunscreen lotion) Upselling 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, emotiondetection software) Webbased selfservice allow customers to use the Web to find answers to their questions or solutions to their problems, including clickto 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) ...
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