Chapter 8

Chapter 8
Business Across the
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
Identify and give examples to illustrate the
following aspects of customer relationship
management, enterprise resource
management, and supply chain management
Business processes supported
Customer and business value provided
Potential challenges and trends
Learning Objectives
Understand the importance of managing at the
enterprise level to achieve maximum
efficiencies and benefits.
Getting All the Geese Lined Up:
Managing at the Enterprise Business
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).
Section 1
Customer Relationship Management:
The Business Focus
I. Introduction
Businesses today must be
Customer-centric/Customer-focused –
Customer, Customer, Customer!
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
Contact and Account Management – capture
and track relevant data about past and
planned contacts
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
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
II. What Is CRM?
Customer Service and Support – provide
customer service software tools, and realtime 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
II. What Is CRM?
Retention and Loyalty Programs – enhancing and
optimizing customer retention and loyalty is a
major business strategy because:
It costs 6 times more to sell a new customer than an
existing one
Dissatisfied customers will tell 8–10 people about bad
A firm can boost sales 85% by increasing customer
retention 5%
Odds of selling a new customer – 15%; Odds of selling a
current customer – 50%
If a firm resolves a service problem quickly, 70% of
complaining customers will do business with the firm
Zip Realty: E-Mail and CRM Integration
with Open-Source Zimbra
What was the problem with the systems used
by Zip?
What benefit did Zimbra offer that other
systems being considered did not?
What benefits does the system offer to users?
How do the costs of the various systems
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
Hard Rock Hotel and Casino: Drinks – and
CRM – Go Mobile
What is the usual problem at a Las Vegas bar?
What idea has Hard Rock come up with?
What technologies are involved?
What other customer services can it provide?
What other benefits does it accrue for Hard
IV. Benefits and Challenges of CRM
CRM helps identify and reward the best
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
Lack of end-user incentives leading to low user
adoption rates
Unum Group: The Long Road to CRM
What was Unum’s problem?
How many systems were originally involved?
How many did they get rid of?
What is the difference between CRM and CDI?
What is the intention of Unum for the future?
VI. Trends in CRM
Firms must create tighter linkages with
customers while enhancing the customer
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
Integrated CRM: Hilton’s Welcome Mat
Starts on the Web
In what ways is Hilton customer-oriented?
What is Hilton’s goal?
How does Hilton view technology?
What is SuiteSelection and how is it customeroriented?
Section 2
Enterprise Resource Planning:
The Business Backbone
I. Introduction
ERP is a multifunctional enterprisewide
backbone that integrates/automates
business processes and information
II. What is ERP?
A cross-functional software suite
supporting basic internal business
processes of a firm
Colgate-Palmolive: The Business Value of
What were Colgate’s needs?
What solutions did SAP provide?
What results have occurred with this
installation? What impact does this have
on business?
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
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
#1 cause – 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
ERP Implementations: When They Fail,
They Fail Big
How is an “ERP Failure” define?
What was the original budget? What
was the last cost?
If the project was a failure, why did they
go ahead with it?
What part did the users have in the
Capital One Financial: Success with ERP
In the old system, how many people had
to sign off on an address change?
Which ERP system did they choose?
(NOTE: also see the Imperial Sugar case)
What cultural change was effected? Why
is that important?
How are software applications accessed?
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
Adoption of Internet Technologies –enables
all the above
VISA International: Implementing the eBusiness Suite
What were the problems with VISA’s
internal systems?
What did the solution do?
Section 3
Supply Chain Management:
The Business Network
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
II. What is SCM?
A cross-functional interenterprise system using
IT to support/manage links between key
business processes and suppliers, customers,
and business partners
Electronic Data Interchange (EDI) – an early SCM
methodology for exchanging information between
partners using standard document message
formats, still very popular but being replaced by
.xml-based Web services
PC Connection: Learning to Stop, Drop, and
What was the problem with PC
Connection’s ERP system?
What was their solution?
How well has it worked?
What does the system have to do with
customer satisfaction?
Telefonica TSAI: Internet EDI
How much of Spain’s EDI traffic does
TSAI handle?
What service does TSAI offer smaller
How does this help these smaller
III. The Role of SCM
• To optimize the effective/efficient movement
of materials between suppliers, customers,
and other partners
Imperial Sugar: Supply Chain Management
to the Rescue
What was Imperial’s problem following
the refinery explosion?
What software did they use to help?
What did this software offer them to
help with the problem?
Which ERP system failed them? Why did
it not work?
IV. Benefits and Challenges of SCM
SCM solutions are becoming more complex
Faster, More Accurate Order Processing
Reductions in Inventory Levels
Quicker Times to Market
Lower Transaction and Materials Costs
Strategic Relationships with Suppliers
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
Emerson Transaction Hub: A Bright Idea
That’s Paying Off
What problem did Emerson identify?
What was the solution to this problem?
How was the solution implemented?
What percentage of costs was saved by
shipping in the same container?
How much did Emerson invest in the
communications hub? Have they
recovered their costs?
Nike Inc.: Failure (and Bouncing Back) with
Supply Chain Management
How much did Nike’s “speed bump”
cost, and in what areas?
How does Nike use historical models?
What have the benefits of the ERP
system been?
V. Trends in SCM
3 Stages to SCM Implementation
Improve Internal Supply Chain Processes
and Improve Relationships with Suppliers
and Customers
Use Supply Chain Software, Intranets, and
Extranets with Trading Partners
Develop and Implement Collaborative SCM
CVS, McKesson, and MPT: Web-Based SCM
Why does CVS prefer push to pull
What do both CVS and McKesson
achieve through this relationship?
What was MPT’s problem?
What solutions does i-Supply offer?