06-LECTURE NOTES 6 - Enterprise Applications

06-LECTURE NOTES 6 - Enterprise Applications - MANAGEMENT...

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Unformatted text preview: MANAGEMENT INFORMATION SYSTEMS (MIS) LECTURE NOTES 6 LECTURE NOTES 6 Achieving Operational Excellence and Customer Intimacy (Enterprise Applications) SPRING 2010 Achieving Operational Excellence and Customer Intimacy Achieving This chapter focuses on how firms use Enterprise-wide Systems to achieve Operational excellence, Customer Intimacy, and improved Decision making. improved Enterprise Systems, and Systems for Supply Chain Management Enterprise and Customer Relationship Management help companies integrate information from many different parts of the business, forge closer ties with customers, and coordinate firm activities with those of Suppliers and other business partners. with As IT professionals, you would be excepted to evaluate and install Software for Enterprise Applications and help your companies redesign their Business Processes to work with the new Software. Achieving Operational Excellence and Customer Intimacy ENTERPRISE SYSTEMS ENTERPRISE Enterprise Systems are also known as Enterprise Resource Planning (ERP) Enterprise Systems. Systems. Enterprise Systems feature a set of Integrated Software Modules and a Central Database that enables data to be shared by many different Business Processes and functional areas throughout the Enterprise. • The Central Database collects data from a large number of key business The processes in Manufacturing, Finance and Accounting, Sales and Marketing and Human Resources, making the data available for Applications that support nearly all of an Company's internal Business activities support • When new information is entered by one business process, the information is When made immediately available to other business processes. made ENTERPRISE SYSTEMS ENTERPRISE (Continued) Imagine that you run a business based on Information Systems from tens of Imagine different Databases and Application Systems, none of which could communicate to one another. communicate To make the case even more dramatic, imagine that the company had 10 To different major Product Lines, each line is produced at separate factories, and each with separate and incompatible sets of Application Systems controlling production, warehousing, and distribution. controlling Your decision making would be difficult to really understand what was Your happening in the business as whole. You would have a very poor grasp of how profitable the company was as a whole, or what your costs were. how Thus, companies are increasingly becoming more connected, both internally Thus, and with other companies. and HOW ENTERPRISE SYSTEMS WORK HOW ENTERPRISE SYSTEMS WORK ENTERPRISE SYSTEMS ENTERPRISE SYSTEMS For Example: If a Salesman places an Order for a car tyre, the ERP System proceeds as If follows: Verifies the Customer’s credit limit Reserves the items in Inventory (stock) Identifies the best Shipping route Schedules the Shipment If Inventory Stock were insufficient to fill the order, the system; Schedules the Production of more tyres, Schedules Order the needed materials from the Suppliers • Sales Forecast and Production Forecast are immediately updated Sales • General Ledger and Corporate cash levels are automatically updated with revenue and cost information from the order. • Users could tap into the system and find out the statues of the order at any minute. • Management could obtain information at any point in time about how the business was Management operating. • Management could also obtain Enterprise-wide data for Management Analyses of Management product Cost and Profitability product ENTERPRISE SOFTWARE ENTERPRISE Enterprise Software is built around so many predefined Business Processes Enterprise that reflect “Best Practice”. that Best Practices are the most successful solutions or problem-solving Best methods in a particular industry for consistently and effectively achieving a business objective. achieving Best Practices emerge from two sources: Consulting Firms (Who work for many firms in the industry) Consulting Software firms ( Who develop industry expertise by working with clients) clients) When a firm hire a Consulting Firm or a Software Firm to help build Enterprise When Systems, in reality hiring the knowledge base of best practices accumulated by these companies over many years. these Companies implementing Enterprise Software would have to: - Select the functions of the systems they wish to use Select ENTERPRISE SOFTWARE ENTERPRISE (Continued) A firm would have to use “ Configuration Tables” provided by the Software to firm Configuration provided tailor a particular aspect of the System to the way it does business. tailor e.g. A firm could use configuration tables to select whether it wants to track revenue by product line, by geographical unit or by distribution channel. If the Enterprise Software does not support the way organization does business, companies can rewrite some of the software to support the way their business processes work. Enterprise Software is unusually complex, and extensive customization may be be required to make it suitable for your business. The customization may degrade the system’s performance, and also compromise the Information and and process integration that are the main benefits of the enterprıse systems. • If a company wants to reap the maximum benefits from enterprise software, it must change the way it works to conform to Business ENTERPRISE SOFTWARE ENTERPRISE (Continued) Software Vendors such as SAP, Oracle, SSA Global, Lawson Software, and Microsoft (Dynamic Software Suite) are major Enterprise Software Vendors. There are versions of enterprise software which can be obtained from Application Service Providers over the Web. Enterprise Software initially designed to automate the companies' internal “Back-office” business processes, then become more externally oriented and capable of communicating with customers, suppliers, and other organizations. BUSINESS VALUE OF ENTERPRISE SYSTEMS ENTERPRISE ERP Systems provide value both by increasing operational efficiency and ERP providing providing organization-wide information to help managers make better decisions. Large companies with many operating units at different geographical locations Large worldwide have used ERP Systems to enforce standard practices and data so that everyone does business in the same way . that For example: Due to lack of standard company-wide business processes, For prevented Coca Cola company from leveraging its worldwide buying power to obtain prices for raw materials and from reacting rapidly to market changes. Coca Cola have implemented SAP Enterprise Systems to standardise and coordinate important Business Processes in 200 countries. BUSINESS VALUE OF ENTERPRISE SYSTEMS (Continued) BUSINESS ERP Software helps firms respond rapidly to their customer requests for ERP information on products and services by integrating order, manufacturing and delivery data. • Manufacturing is better informed about producing only what customers have ordered, • Buying exactly the right amount of components or raw materials to fill actual orders, • Staging Production, • Minimizing the storage time of components and finished products Minimizing ERP Software includes Analytical tools for using data captured by the System ERP to evaluate overall Organizational performance. to ERP System data have common standardized definitions and formats that are ERP accepted by the company. accepted ERP Systems allow companies’ Senior Management to easily find out how a particular Organizational Unit is performing or to determine which Product are most or least profitable at any moment . are SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS SUPPLY A large firm that produces many complex products and services has tens and even large hundreds of suppliers and sometimes the firm’s suppliers each have their own sets of suppliers. In that event the company will need to coordinate the activities of many supplier firms in order to produce their products and services. supplier Supply Chain Management Systems, are an answer to these problems of supply chain Supply complexity and scale. complexity SUPPLY CHAIN A firm’s Supply Chain is network of organization, organizations’ bbusiness processes for business procuring raw materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers. products, Supply Chain links all participants listed below from source to consumption: Supply - Suppliers Suppliers Manufacturing plants Manufacturing Distribution centres Distribution Retailers Retailers Customers Customers SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS SUPPLY Materials, information, and payments flow through the Supply Chain in both directions. Goods start out as raw materials and, as they move through the Supply Chain, they are transformed into intermediate products (Components or parts) , and finally , into finished products. The finished products are shipped to distribution centres and from there to retailers and eventually to customers. Returned items flow in the reverse direction from the buyer back to the seller. Returned Example: NIKE designs, markets, and sells sneakers, socks, athletic clothing and accessories throughout the word. Nike’s primary suppliers are contract manufacturers with factories in Nike primary China, Indonesia, Brazil Thailand and several other countries. However, Nike’s contract suppliers do not manufacture sneakers from scratch. They obtain components from other sand then assemble them into finished sneakers. These component suppliers in turn have their hem owns suppliers and the chaıın contınues. the SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS SUPPLY The following ddiagram shows simplified Supply Chain for Nike. It shows the flow of Information The diagram and materials among Suppliers, Nike, and Nike’s Distributors, Retailers, and Customers. The Contract Manufacturers are Nike’s primary Suppliers. Suppliers of soles, uppers, laces etc. are the secondary (Tier 2) Suppliers. Suppliers to the Secondary Suppliers are the tertiary (Tier 3) Suppliers. Suppliers The Upstream portion includes Nike’s Suppliers, The Suppliers’ Suppliers and the processes for managing relationships with them. relationships The Downstream portion consists of the Nike’s Processes for Distributing and Delivering products to the final The Customers Customers SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS SUPPLY Companies doing Manufacturing like Nike’s Contractors also manage their own Companies “Internal Supply Chain Processes” for transforming materials, components, and services furnished by their Suppliers into finished products (components or parts) for their Customers and for managing materials and inventory. Customers INFORMATION AND SUPPLY CHAIN MANAGEMENT The inaccurate or untimely information cause Inefficiencies in the Supply Chain such as: - Parts Shortage Parts Underutilized plant capacity Excessive finished goods inventory Excessive High transportation costs e.g. Manufacturing companıes may keep too many parts in their inventory, because they ng ay do not know exactly when they will receive next shipment from their suppliers. Suppliers may order too few raw materials, because they do not have precise Suppliers information on demand. INFORMATION AND SUPPLY CHAIN MANAGEMENT If a Manufacturer had accurate and timely Information about exactly how many units of Product Customers wanted, when they wanted and when they could be produced , it would be possible to implement a highly efficient Just-in-time (JIT) Strategy. Just-in-time Components would arrive exactly at the moments they were needed and Components finished goods would be shipped as they left the assembly line. finished Uncertainties arise in a Supply Chain, because many events connot be foreseen Uncertainties such as : Uncertain product demands, Late shipment of raw materials from suppliers, Defective parts of raw material, Production process breakdowns Production Manufacturers often deal with such uncertainties and unforeseen events. Manufacturers INFORMATION AND SUPPLY CHAIN MANAGEMENT In order to satisfy the Customers demands companies have to keep more raw material And finished products in inventory than what they think they may actually need as Safety Stock. Safety The Safety Stock acts as a buffer for the lack of flexibility in the Supply Chain. Although excessive Inventory is expensive, low inventory level is also costly because business may lose a lot from cancelled orders. business One recurring problem in Supply Chain Management is the Bullwhip Effect, in which One Bullwhip in information about the demand for a product gets distorted as it passes from one entity to the next across the Supply Chain. the A slight rise in the demand for an item might cause different members in the Supply Chain Distributors, Manufacturers, Suppliers, Secondary and tertiary Suppliers to stockpile Inventory so each has enough “Just in Case” . These changes ripple throughout the Supply Chain, magnifying what started out as a small change from planned orders, creating excess Inventory, Production, Warehousing, and Shipping costs. INFORMATION AND SUPPLY CHAIN MANAGEMENT INFORMATION The diagram below shows how inaccurate information can cause fluctuations in The demand for a product to be amplified as one moves further back in the Supply Chain. Mirror fluctuations in Sales of a Product can create excess Inventory for Distributors, Manufacturers and Suppliers for INFORMATION AND SUPPLY CHAIN MANAGEMENT INFORMATION The Bullwhip effect can be eliminated or minimized by The reducing uncertainties about Demand and Supply by having accurate and up-to-date information and sharing dynamic information about inventory levels, production schedules, forecasts and shipments amongst the participants. Supply Chain Management Systems provide the kind of information that helps members of the Supply Chain make better purchasing and scheduling decisions. purchasing SUPPLY CHAIN MANAGEMENT APPLICATIONS SUPPLY Supply Chain Planning Systems Supply Supply Chain Execution Systems 1. SUPPLY CHAIN PLANNING SYSTEMS Help the firm to generate Demand Forecasts for a product and to develop sourcing and manufacturing plans for that product. sourcing Supply Chain Planning Systems help companies make better operating decisions, such as: decisions, - Determining how much of a specific Product to be manufactured in a given time period establishing raw materials, components or parts, and finished goods inventory. - Determining were to store finished goods Determining - Identifying the transportation mode to use for product delivery. SUPPLY CHAIN MANAGEMENT APPLICATIONS SUPPLY 1. SUPPLY CHAIN PLANNING SYSTEMS Example: If a customer places a large order than usual or changes that order on short notice, it can have a widespread impact throughout the supply chain. Additional raw materials or different mix of raw materials may Additional need to be ordered from suppliers. Manufacturing may have to change job scheduling Transporter may have to reschedule deliveries. The Supply Chain Planning Software makes the necessary adjustment to The Production and Distribution Plans. Production Information about changes is shared among relevant supply chain members so that their work can be coordinated. so SUPPLY CHAIN PLANNING SYSTEMS SUPPLY One of the most important and complex supply Chain Planning One function is ‘’Demand Planning’’. function Demand Planning determines how much product a business needs to make to satisfy all its customers’ demands. satisfy CAPABILITIES OF SUPPLY CHAIN PLANNING SYSTEMS a) Order Planning b) b) c) c) d) d) e) e) Advanced Scheduling and Manufacturing Planning Demand Planning Distribution Planning Transportation Planning CAPABILITIES OF SUPPLY CHAIN PLANNING SYSTEMS CAPABILITIES a) Order Planning a) Selects an Order fulfilment plan that best meets the desired level of service to the customer given existing transportation and manufacturing constraints. manufacturing a) Advanced Scheduling and Manufacturing Planning Provides detailed coordination of scheduling based on an analysis of changing factors, such as: of • • Customer orders, Customer Supply interruptions, Supply Equipment outages. Equipment Scheduling modules, Scheduling Create job schedules for the manufacturing process and Create supplier ogistics. supplier CAPABILITIES OF SUPPLY CHAIN PLANNING SYSTEMS CAPABILITIES a) Demand Planning a) Demand Generates demand forecasts from all business units using statistical Generates emand tools and business forecasting techniques. a) Distribution Planning Create operating plans for logistic management for order fulfilment based on Input from demand and manufacturing modules. a) Transportation Planning Transportation Tracks and analyze inbound, outbound , and inter-company movement of materials and products to ensure that materials and finished goods are delivered at the right time and places at the minimum cost. are SUPPLY CHAIN MANAGEMENT APPLICATIONS SUPPLY 2. SUPPLY CHAIN EXECUTION SYSTEMS Supply Chain Execution Systems manage the flow of products through Distribution Centres and Warehouses to ensure that the products are delivered to the right locations in the most efficient manner. locations Supply Chain Execution Systems tracks :Supply The physical status of goods, The The management of materials, The Warehouse and transportation operations Warehouse Financial information involving all parties CAPABILITIES OF SUPPLY CHAIN EXECUTION SYSTEMS CAPABILITIES a) a) b) b) c) c) d) d) e) e) Order commitment Final production Replenishment Distribution management Reverse distribution CAPABILITIES OF SUPPLY CHAIN EXECUTION SYSTEMS CAPABILITIES a) Order Commitment Enable company to quote accurate delivery dates to customers by providing more real-time detailed information on the status of orders from availability of raw materials and inventory to production and shipment status. materials b) Final Production Organize and schedule final sub-assemblies required to make each final product. Organize a) Replenishment a) Coordinate component replenishment work so that warehouses remain stocked with the minimum amount of inventory in the pipeline. with a) Distribution Management Coordinate the process of transporting goods from the Manufacturer to Distribution Centres and to the Final Customer. Provide online customer access to shipment and delivery data. shipment a) Reverse Distribution Track the Shipment and Accounting for Returned Goods or Re-manufactured Products. Products. SUPPLY CHAIN MANAGEMENT AND INTERNET SUPPLY SUPPLY CHAIN - Before The Internet Era: Supply Chain coordination was hampered by the difficulties of making information flow smoothly among disparate internal Supply Chain Systems for Purchasing , Material Management, Manufacturing, and Distribution. Material It was also difficult to share Information with External Supply Chain Partners because the Systems of Suppliers, Distributors, or Logistics provides were based on incompatible Technology platforms and standards. Enterprise Systems could supply some integration of Internal Supply Chain Processes Enterprise but they were not designed to deal with External Supply Chain Processes. but SUPPLY CHAIN WITH INTERNET Some Supply Chain Integration is supplied inexpensively using Internet Some Technology such as Intranets and Extranets. Technology Firms use Intranets to improve coordination among their Internal Supply Chain Firms Processes, Processes, Firms use Extranets to coordinate Supply Chain Processes shared with their Business Firms Partners. Partners. INTERNETS AND EXTRANETS FOR SUPPLY CHAIN MANAGEMENT INTERNETS Intranets integrate information from isolated Business Processes within the Firm to help manage its Internal Supply Chain. Access to the private Intranets can also be extended to Authorized Suppliers, Distributors, Logistic Services, and sometimes to Retail Customers to improve coordination of External Supply Chain Process. DEMAND DRIVEN SUPPLY CHAINS DEMAND Supply Chain Management Systems facilitate efficient Customer response, enabling the Supply workings of business to be driven more by Customer Demand as well as reducing costs. workings PUSH-BASED SUPPLY CHAIN MANAGEMENT MODEL In a Push-based Model Production Master Schedules are based on Forecasts or best guesses of Demand for Products, and Products are “Pushed” to Customers. Earlier SCM Systems were driven by a Push-based model known as Build-to-Stock Build-to-Stock model. model. PULL-BASED SUPPLY CHAIN MANAGEMENT MODEL PULL-BASED With new flow of information made possible by Web-based tools, SCM more easily follows a Pull-based Model also known as Build-to-Order Model , or “Demand-driven Build-to-Order Demand-driven Model” Model” In the Pull-based Model actual Customer Orders or Purchase trigger events in the Supply Chain . Supply Transactions to Produce and Deliver only what Customers have Ordered move up the Supply Chain stream from Retailers to Distributors to Manufacturers and eventually to Suppliers. DEMAND DRIVEN SUPPLY CHAINS DEMAND • Only Products to fulfil the Orders move back down the Supply Chain to the Retailer. Only • Manufacturers use only actual Order demand information to drive their Production Schedules and the Procurement of Components or raw materials. The difference between Push-based Models and the Pull-based Models is summarized by The the slogan “Make what we sell, not sell what we make” “Make DEMAND DRIVEN SUPPLY CHAINS DEMAND The Internet and Internet Technology make it possible to move from Sequential Supply The Chains, where information and materials flow sequentially from company to company, to concurrent Supply Chains, where information flows in many directions simultaneously among members of a Supply Chain network. simultaneously • Members of the network immediately adjust to changes in schedules or orders. Members • Ultimately, the Internet could create a ‘’Digital Logistics Nervous System’’ through the Ultimately, Supply Chain. Digital Logistics Nervous System permits simultaneous multidirectional communication of information about supply chain participants Inventories, Orders and capacities, optimizing the activities of individual firms and groups of firms interacting in e-commerce marketplaces. THE FUTURE INTERNET-DRIVEN SUPPLY CHAIN THE The future Internet-driven Supply Chain operates like a Digital Logistics Nervous The System. The Future Internet-driven Supply Chain provides multidirectional communication among firms, networks of firms, and e-marketplaces so that entire networks of Supply Chain partners can immediately adjust Inventories, Orders and Capabilities. Chain BUSINESS VALUE OF SUPPLY CHAIN MANAGEMENT SYSTEMS BUSINESS Supply Chain Management Systems enable firms to streamline both their internal and Supply external Supply Chain Processes and provide Management with more accurate information about what to produce, store, and move. information By implementing a Networked and Integrated Supply Chain Management System, By companies: companies: . Match Supply to Demand, • Reduce Inventory levels, • Improve Delivery service, Improve • Speed Product time to market, Speed • Use Assets more effectively. • Total Supply Chain Costs represent the majority of Operating expenses for many businesses and in some industries approach 75% of the total Operating budget. businesses • Reducing Supply Chain Costs may have a major impact on firms profitability. Reducing In addition to reducing Costs , SCM Systems help increase sales. In • Also Control of Supply Chain, enhances the firm’s ability to have the right product available for Customer purchase at the right time,. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER The following Slogans make more sense than ever before. ‘’The Customer is always right’’ OR ‘’Customer Comes First’’. ‘’ Competitive Advantage based on an innovative new product or service is often very short lived, companies are realizing that their only enduring competitive strength may be their relationships with their Customers. Nowadays, Competition has switched from ‘’Who sell the most products and services to ‘’Who owns the Customer’’ , and that Customer Relationships represent a firm’s most valuable assets. What kind of information would you need to build and nurture strong, long-lasting relationship with Customers? You need to know exactly: long-lasting • • • • Who your customers are; Who How to contact your Customers; How Whether they are costly to service and sell to; Whether What kind of Products ands Services they are interested in; What CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER In a small business operating in a neighbourhood , it is possible to know customers on a personal, face-to-face basis. But in a large business operating on a metropolitan, regional national or even global basis, it is impossible to know customers in the intimate way. Because there are many Customers and too many different ways that customers interact with the firm (over Web, phone, fax and face-to face). It becomes especially difficult to integrate information from all theses sources and to deal with the large number of Customers. Customer Relationship Management Systems help to solve the above mentioned problems. Customer Relationship Management Systems (CRM) capture and integrate customer data from all over the organization, consolidate and analyze the data, and then distribute the results to various Systems and Customer touch points or Contact point across the enterprise. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER A Touch Point is a method of interaction with the Customer, such as by telephone, fax, e-mail, service desk, mail, web site, wireless device, or at retail store. Well designed CRM Systems provide a single enterprise view of customers that is useful for improving both sales and customer service. CRM also provides a single view of the customer to the company regardless of what touch point the customer uses. (figure below) (figure CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER CRM Systems examine Customers from a multifaceted perspective. CRM Systems use a set of integrated applications to address all aspect of the Customer Relationship, including Customer service, Sales, and Marketing. Customer Good CRM Systems provide Analytical tools for answering questions such as : What is the value of a particular customer to the firm over his/her lifetime? Who are the most loyal Customers? Who are the most profitable customers? What do these profitable customers want to buy? Firms use the answers of the above questions to : Firms Acquire new Customers, Provide better services and support to existing Customers, Customize their offerings more precisely to customer preferences, Provide ongoing value to retain profitable Customers. Provide CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER Customer Relationship Management Software (CRM) Packages range Customer from niche tools that perform a limited functions, such as personalizing Web Sites for specific customers, to Large-scale Enterprise Applications that capture myriad interactions with customers and analyze them with sophisticated Analytical and Reporting Tools, and link customers to other major Enterprise Applications, such as Supply Chain Management and Enterprise Systems. Enterprise The more comprehensive CRM Packages contain modules for : Partner Relationship Management (PRM) System Employee Relationship Management (ERM) System. Employee CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER Partner Relationship Management System (PRM) uses many of the same Partner data, tools, and Systems as Customer Relationship Management to enhance collaboration between a company and its selling partners. collaboration If a company does not sell directly to Customers but rather works If through Distributors or Retailers, PRM helps these channels sell to Customers directly. PRM provides a company and its selling partners with the ability PRM to trade information and distribute leads and data about customers, integrating lead generation, pricing, promotions, order configurations and availability. order PRM also provides a firm with tools to assess its Partners’ PRM performance so it can make sure its best partners receive the support they need to close more business. support EMPLOYEE RELATIONSHIP MANAGEMENT SYSTEMS (ERM SYSTEMS) EMPLOYEE Employee Relationship Management (ERM) Software deals with Employee issues that are closely related to CRM, such as: - Setting objectives Setting Employee Performance Management Employee Performance based compensation Performance Employee training etc….. Employee CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER Customer Relationship Management Systems (CRM) typically provide Software and Customer Online Tools for Sales, Customer Services and Marketing business functions. Online CRM Systems contain the following Modules - Sales Force Automation Sales - Customer Service Customer - Marketing Automation Marketing SALES FORCE AUTOMATION MODULE (SFA) Sales Force Automation Modules in CRM Systems help Sales staff increase Sales their productivity by focusing sales efforts on the most profitable customers, who are good candidates for sales and services. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER CRM SOFTWARE provides: CRM • • • Sales prospects and contact information, Product configuration capabilities, Sales quote generation capabilities. Sales • CRM Software Assemble information about a particular customer’s past purchases to help the Salesperson make personalized recommendations. • Enables Sales, Marketing and Delivery Departments to easily share Customer and prospect Information. • Increases each Salesperson’s efficiency by reducing costs per sales as well as cost of acquiring new customers and retaining old ones. • CRM Software also has capabilities for Sales Forecasting, Territory Management, and Team Selling. - CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER CUSTOMER SERVICE MODULE Customer Service Modules provide Information and tools to increase the Customer efficiency of Call Centre, Help Desks and Customer Support staff. efficiency They have capabilities for assigning and managing Customer service requests. They • When a Customer calls a standard phone number, the System routes When the call to the correct Service person, who inputs information about the customer into the system only once. Once the data is in the System , any Service Representative can handle the Customer Relationship. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER CUSTOMER SERVICE MODULE • Improved access to consistent and accurate customer information Improved helps Call Centres handle more calls per day and decrease the duration of each call. duration • Call Centres and Customer Service Groups achieve greater Call productivity, reduced transaction time, and higher quality of service at lower cost. at • Customer is happier because s/he spends less time on phone Customer restating his/her problem to Customer Service Representatives. restating CRM may also include Web-based Self-service capabilities. • Web site can provide inquiring Customer personalized Support Web information as well as the option to contact Customer Service Staff by phone for additional assistance. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER CRM Marketing Module provides a single point for users to manage and CRM evaluate Marketing Campaigns across multiple channels, including e-mail, direct mail, the Web, and Wireless messages. direct CRM Marketing Modules also include Tools for analyzing Marketing and CRM Customer Data to: Customer - Identifying profitable and unprofitable Customers, Designing products and services to satisfy specific Customer needs and interests, - Identifying opportunities for Cross-selling. Cross-selling. Cross- Selling is the Marketing of Complementary Products to Customers. Example: In Financial Services a Customer with a Checking Account might be In sold a Money Market Account or a Home Improvement Loan. CRM Tools also help firms manage and execute Marketing Campaigns at all CRM stages, from Planning to Determining the Rate of Success for each campaign. stages, CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER CRM MARKETING MODULE CRM Marketing Module supports Direct Marketing Campaign by CRM providing capabilities for capturing: providing • Prospect and customer data, Prospect • Product and service information, for qualifying leads for targeted marketing, and for Scheduling and tracking direct-Marketing •or e-mail. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER Figure below illustrates the most important capabilities for Sales, Services, and Figure Marketing processes that would be found in major CRM Software Products like Enterprise Software which is a business-process driven , incorporating hundreds of business processes thought to represent best practices in each of these areas. To achieve maximum benefits from CRM, companies need to revise and model their business processes to conform to the best-practice business process in the CRM Software. Software. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER CRM Software provides a firm with Customer Loyalty Management CRM process to assign each customer a score, which is based on the Customer’s Value and Loyalty to the company. The loyalty information help call centres route each customer’s service request to service agents who can best handle that customer’s needs. request The CRM System would automatically provide the Service Agent with a The detailed profile of the customer that included his /her score for value and loyalty. loyalty. • The Service Agent would use this information to present special offers or additional services to the Customer to encourage the customer to keep transacting business with the company. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER CUSTOMER LOYALTY MANAGEMENT PROCESS Figure below illustrates how a Best-practice for increasing customer loyalty through Figure customer service might be modelled by CRM Software. The CRM Software helps firms identify High-value Customers for preferential treatment The CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER OPERATIONAL AND ANALYTICAL CRM Operational CRM includes Customer-facing Applications such as tools for: Sales Force Automation, Sales Call Centre and Customer Service Support, Marketing Automation. Analytical CRM includes Applications that analyze customer data generated by Operational CRM Applications to provide information for improving business performance. performance. Analytical CRM Applications are based on Data Warehouses that consolidate the Analytical data from Operational CRM Systems and Customer Touch Points for use with Online Analytical Processing (OLAP), Data Mining and other Data Analysis Techniques. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM) CUSTOMER ANALYTICAL CRM DATA WAREHOUSE ANALYTICAL DATA Analytical CRM uses a Customer Data Warehouse and Tools to analyze Analytical Customer data collected from the firm’s Customer Touch Points and from other sources. sources. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) • Customer Data collected by the Organization’s operatıng CRM systems might be combined with data from other sources, such as customer lists for direct Marketing campaigns (purchased from thırd partıes) or demographic data. • Customer data are analyzed to: • Identify the buying patterns, to create segments for targeted marketing, and to pinpoint profitable and unprofitable customers . Define ‘’Lifetime Value of Customers’ Customer Lifetime Value (CLTV) is based on the relationship between the: • Revenue generated by a specific Customer, • Expenses incurred in acquiring and servicing customers, • Expected life of the relationship between the Customer and the company. CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRM ) CUSTOMER BUSINESS VALUE OF CUSTOMER RELATIONSHIP MANAGEMENT BUSINESS SYSTEMS SYSTEMS Companies with effective Customer Relationship Management Systems realize many benefits including : benefits Increased customer satisfaction, Increased Reduced direct-marketing costs, Reduced Increase the effectiveness of marketing, Increase Lower costs for customer acquisition and retention. Information from CRM Systems increases sales revenue by identifying the most Information profitable customers and segments for focused marketing and cross-selling. cross-selling Customer Churn is reduced as Sales, Services, and Marketing better respond to Customer needs. Customer The Churn Rate measures the number of customers who stop using the company or purchasing products or services from a company. Churn Rate is an important indicator of the growth or decline of a firm’s Churn NEW OPPORTUNITIES AND CHALLENGES WITH ENTERPRISE APPLICATIONS Enterprise Applications involve complex pieces of Software that are very expensive to purchase and implement. Development and large scale of implementation of an Enterprise System, Supply Chain Management or a Customer Relationship Management System might take a large company several years. The Total Implementation cost of a large System, including the followings The might amount to four to five times the initial Purchase price for the Software. might Software, Database Tools, Consulting fees, Personel costs, Person Training, Hardware costs, ( if applicable) Hardware Enterprise Applications require not only deep seated technological changes but also fundamental changes in the way the business operates. NEW OPPORTUNITIES AND CHALLENGES WITH ENTERPRISE APPLICATIONS NEW Companies must make sweeping changes to their business processes to work with the Entrprıse software. Employees must accept new job functions and responsibilities. They must Em must learn how to perform a new set of work activities and understand how the information they enter iinto the System can affect other parts of the company System Supply Chain Management Systems require multiple organizations to Supply share information and business processes. Each participant in the share System may have to change some of its business processes and the way it System uses information to create a System that best serves the Supply Chain as a whole. whole. Some firms experienced enormous Operating losses, when they first implemented Enterprise Application. Because they did not understand how much organizational change was required. how NEW OPPORTUNITIES AND CHALLENGES WITH ENTERPRISE APPLICATIONS Enterprise Applications also introduce ‘’Switching Costs’’ . Once you adopt Enterprise an Enterprise Application from a single Software Vendor, (such as SAP, Oracle etc..) . It gets very costly to switch vendors, and the firm becomes dependant on that vendor for upgrade and maintenance. Enterprise Applications are based on organizational wide definitions of data . Therefore, it is absolutely necessary to understand exactly how the business uses that data and how the data would be organized in a Customer Relationship Management, Supply Chain Management or Enterprise Resource Planning Systems. Customer Relationship Management System in particular will necessitate some data cleansing work. EXTENDING ENTERPRISE SOFTWARE Many experienced business firms are looking for ways to bring more value Many from their Enterprise Applications. from One way to extend is to make Enterprise Software more flexible , Web-enabled, and capable of integration with other Systems. The major Enterprise Software Vendors have created what they The call ‘’Enterprise Solutions’’, ‘’Enterprise Suites’’ or E-business Suites to make their Customer Relationship Management, Supply Chain Management, and Enterprise Resource Planning System that work closely with each other, and to link with Customers’ and Suppliers systems. Another way of leveraging investments in Enterprise Applications is to Another use the systems to create Service Platforms for new or improved business processes that integrate information from multiple functional areas. processes A Service Platform integrates multiple applications from multiple business functions, business units, or business partners to deliver a seamless experience for the customer, business partner, manager and employee. ENTERPRISE APPLICATIONS SOFTWARE In summary, it takes a lot of work to install and get the In summary, it takes a lot of work to install and get the Enterprise Applications to work properly. Everyone in the organization must be involved in the Enterprise application project. Of course, for those companies that have successfully implemented ERP, CRM, and SCM, the results have justified the effort. ...
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This note was uploaded on 08/12/2011 for the course ITEC 421 taught by Professor Huseyingursev during the Spring '11 term at Eastern Mediterranean University.

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