ERP & CRM
Information Technology and Business
Minder Chen, Ph.D.
Minder.chen@csuci.edu
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
© Minder Chen, 1996-2005
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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
© Minder Chen, 1996-2005
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What is ERP?
• Software tools
• Manages business systems
– Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting,
HR
• Allows automation and integration of business
processes
• Enables data and information sharing
• Enterprise-wide system
• Introduces “best practices”
© Minder Chen, 1996-2005
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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
© Minder Chen, 1996-2005
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http://upload.wikimedia.org/wikipedia/en/6/6a/Manufacturating_Resource_Planning.jpg
© Minder Chen, 1996-2005
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Integrated Systems Approach
• Common set of applications/modules
• Usually requires the reengineering
business processes according to ERP
package’s underlying business model
– Better alignment
• Limit your customization
– Easier upgrades
• Overcomes inefficiencies of independent
systems
• Integrated data supports multiple
business functions
© Minder Chen, 1996-2005
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Major Vendors
• Microsoft
– 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
© Minder Chen, 1996-2005
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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
© Minder Chen, 1996-2005
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/ Web-enabled architecture
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ERP
Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport
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Procurement Tasks
Materials
Planning
External Procurement
Purchasing
Invoice Verification
Internal Procurement
Production
Master Data
Inventory Management
Material
Batches
Vendors
G/L accounts
Storage bins
Goods
Issue
Invoice
Receipt
Internal and External
Accounting
© Minder Chen, 1996-2005
Goods Receipt
Sales and
Distribution
Transfer
Posting
R
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ERP: Business Processes Overview
Financial Controlling
Cost Controlling
Sales
Sales order
Initial
Contact
Customer
order
Inventory
Sourcing
SOP
MPS
MRP
Production
Purchasing
Logistics Controlling
Purchase
requisite.
Delivery
Planned
order
Vendor
selection
Purch .
order
Invoicing
Prod.
order
Goods
issue
Customer
payment
Prod.
control
Invoice
verificat.
Vendor
payment
Sales, Production, Purch., Warehouse Mgmt
http://134.198.33.115/sap/1000.htm
© Minder Chen, 1996-2005
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R/3 Logistics Process Flow
© Minder Chen, 1996-2005
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The Flow of Your Implementation Process
Define
project
scope &
organization
Install
software
Train project
team
Define & build
technical
infrastructures
Perform
fit/gap
analysis
Perform
testing
Build and
test
prototypes
Go
live
Tune system
performance
Convert
data
Support
system
after
conversion
Develop
interfaces
Evolve
system
Create end-user
procedures
documentation &
training
© Minder Chen, 1996-2005
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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.
© Minder Chen, 1996-2005
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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
© Minder Chen, 1996-2005
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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
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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
© Minder Chen, 1996-2005
Increased revenue
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Maximizing Benefits from Enterprise Systems
Distinctive
Characteristics
of Packaged
Enterprise
Application
Software
(PEAS)
Packaged
Software
Features
Evolving
Functionality
Evolutionary Spiral of PEAS &
Process Change and Management
Initiatives
Net Benefits
from ES Use
Another cycle of ES
Exploration,
Redesign and Use
Achieving Fit between PEAS and Business needs
Assess and
Explore PEAS
Assess and
Explore
Processes
Agree on
Redesigned
Processes
Changes
to PEAS
Changes
to
Process
Sophisticated
Knowledge
Application
Infrastructure
Monitor Changing
Conditions &
Reevaluate
Benefits
Use ES to
Generate
Benefits
Initiatives to
Manage the
Distinctive
Characteristics of
the PEA Software
Operational
Benefits
Managerial
Benefits
Strategic
Benefits
IT infrastructure
Benefits
Organizational
Benefits
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Source:
http://www.dis.unimelb.edu.au/staff/peter/615-260webraft/pub/index.html
© Minder
Chen, 1996-2005
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
(1998)
Transformation
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.
© Minder Chen, 1996-2005
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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 designstage 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
© Minder Chen, 1996-2005
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Customer Relationship Management (CRM)
The measures an organization takes to
–
–
–
–
–
identify,
select,
acquire,
work with, and
retain
its customers
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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)
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© Minder Chen, 1996-2005
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Highest Level Business Flow
Source: Oracle.
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Architecture
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Advertise your
business on Google
Take five minutes
to write your ad
and select a couple
keywords—even target
your ad locally.
People click on
your ad
When people search
on Google, your ad is
displayed and traffic
is driven to your site.
© Minder Chen, 1996-2005
Capture leads
from your Web site
Prospects fill out a
Web form, which
creates a lead in
Salesforce that is
routed to your sales
team.
Manage the follow-up
process
Log calls, send emails,
and update the status
of your leads so that
you never miss an
opportunity.
Convert leads into
customers
Update deal
information, track
opportunity
milestones, and record
all opportunity-related
interactions.
Manage customer
relationships
Acquire deep knowledge
of every account,
facilitate collaboration,
and build and maintain
strong, lasting customer
relationships.
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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
You can monitor
your opportunities
reports and
dashboards to keep
track of your top
deals and prioritize
your time.
Presentation
Proposal
Negotiation
Won
Yes
No
New Customers
Support
Customize Salesforce to fit your
internal sales methodologies and
Salesforce gives your entire
processes, making it easier to
company a 360-degree view of
monitor your sales pipeline.
Keep an archive of your dead opportunities. your customers and facilitates
collaboration across your
Use email marketing and call
organization, helping you build
downs to re-market to your
strong, lasting customer
archived opportunities.
relationships.
E-Business Integration Imperatives
SouthWest.com
Internet /
Virtual Private
Network
Trading Partners
Suppliers
Distributors
Business Partners
B2C
Consumers
B2B
Integration
Dollars.com
REQUIREMENTS
EAI
Standards based integration
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
© Minder Chen, 1996-2005
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The B2C Business Models – Bricks, Clicks, Revolution and Evolution
Clicks
Bricks
Gap, Safeway, Wallmart
• Bricks organizations set up
separate click organizations
to give the required freedom
to operate in the fast moving
Click environment
or
• Clicks organizations were
created through VC capital
Bricks & Clicks
• Sat on the sidelines for the explosion
• Evolved to online commerce
• Online services are incremental
• Not huge differentiators for clients
• Source of convenience
• Took advantage of lessons learned
• Assets CHEAP from Click failures
© Minder Chen, 1996-2005
eBay, Amazon, Webvan,
Wingspan Bank, Yahoo
• Mergers or sales of assets to Bricks
• Folding bricks ventures into portfolio
• Narrow focus of offerings
Wells Fargo, Safeway,
Barnes and Noble
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ERP, CRM, SCM Implementation
Software
• Package (proprietary or open source)
• Hosting Solution (SaaS)
• Custom-build
Staffing
• In house staff
• Systems integration/Consulting firm
© Minder Chen, 1996-2005
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A Taxonomy for
System
Development
Methodologies &
Strategies
© Minder Chen, 1996-2005
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Commercial Application Package Implementation Strategy
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