6
Enterprise E-Business Systems
Section I: Customer Relationship Management(CRM)
(Chapter 4 – p128)
Many companies are implementing CRM business initiatives and information systems as part of their customer
focused or customer-centric strategy to improve their chances of success in today’s competitive business
environment.
Customer relationship management: (p130 old textbook)
 CRM is described as a cross-functional E-business application that integrates and automates many customerserving processes in sales, marketing, and customer service
 CRM systems create an IT framework of Web enabled software and databases that integrates these processes
with the rest of a company’s business operations.
 CRM systems consist of a family of software modules that provides the tools that enable a business and its
employees to provide fast, convenient, dependable and consistent service to its customer.
 Figure 6.1 (Fig 4.6) shows some of the major application components of a CRM system.
Contact and account management – CRM software helps sales, marketing and service professionals capture and
track relevant data about every past and planned contact with prospects and customers, as well as other business and
life cycle events of customers. Captured from telephone, fax, email, Web site, retail stores, kiosks, personal contact.
CRM systems store the data in a common customer database that integrates all the customer account information and
makes it available throughout the company via Internet, intranet, other networks, and other CRM applications.
Sales – Provides sales reps with software tools and company data they need to support and manage their sales
activities and optimise cross-selling and up-selling. Information on prospects, products, sales quotes etc.. Real-time
access to customer view to check on account status and history prior to sales calls.
Marketing and fulfilment – automating tasks such as qualifying leads for targeted marketing and scheduling and
tracking direct marketing mailings. Helps capture and manage prospect and customer response and analyse the
business value of direct marketing campaigns. Assists fulfilment of prospects and customer responses by quickly
scheduling sales contacts and providing information on products and services.
Customer Service and Support - CRM helps customer service managers quickly create, assign, and manage service
requests. Call centre software routes calls to staff based on their skills and authority to handle different requests.
Help desk software assists customer service reps in helping customers whom are having problems with a product or
service, by providing relevant service data and suggestions for resolving problems. Web-based self-service enables
customers to get support from the company while still have the option to get further assistance online or by phone.
Retention and loyalty programs (p128)
 It costs six times more to sell to a new customer than to sell to an existing one.
 A typical dissatisfied customer will tell eight to ten people about his or her experience.
 A company can boost its profits 85 percent by increasing its annual customer retention by only 5 percent.
 The odds of selling a product to a new customer are 15 percent, whereas the odds of selling a product to an
existing customer are 50 percent.
 Seventy percent of complaining customers will do business with the company again if it quickly takes care of a
service snafu.
That’s why enhancing and optimising customer retention and loyalty is a major business strategy. CRM help a
company identify, reward and market to its most loyal and profitable customers.
The Three Phases of CRM Figure 6.3 (not in old textbook)
Another way to look at CRM – integrated system of Wen-enabled software tools and databases accomplishing a
variety of customer-focused business processes that support the three phases of the relationship between a business
and its customers.
Acquire - by doing a superior job of contact management, sales prospecting, selling, direct marketing and
fulfilment. Help customers perceive the value of a superior product from an outstanding company.
Enhance – superior service from a responsive networked team of sales and service specialists. Help to cross-sell and
up-sell increasing profitability. Value perceived by customers is convenience of one-stop shopping at attractive
prices.
Retain – identify and reward most loyal and profitable customers, retain and expand business via targeted marketing
and relationship marketing programs. Value perceived by customers is rewarding personalised business relationship.
Business benefits of customer relationship management (p130-131)
 CRM allows a business to identify and target their best customers; those who are the most profitable to the
business, so they can be retained as lifelong customers for greater and more profitable services.
 CRM enables real-time customisation and personalization of products and services based on customer wants,
needs, buying habits, and life cycles.
 CRM can keep track of when a customer contacts the company, regardless of the contact point.
 CRM enables a company to provide a consistent customer experience and superior service and support across all
the contact points a customer chooses.
CRM Failures (not in old textbook)
Benefits are not guaranteed and have been elusive for many companies. Some research suggests 50% of CRM
projects did not produce the results that were promised. 20% of business reported CRM implementations actually
damaged long-standing customer relationships. With Senior Managers CRM ranked near the bottom in user
satisfaction of 25 management tools surveyed, even though 72% expected to have CRM systems implemented
shortly.
Major reason for failure is lack of understanding and preparation. Rely on CRM to solve a business problem without
first developing the business process change and change management programs required. Not involving the business
stakeholders. Means employees and customers not prepared for the new process or challenges that come with the
CRM implementation.
Trends in CRM Figure 6.4 (not in old textbook)
Section II - Enterprise Resource Planning (ERP): (p127 old textbook)
Enterprise resource planning (ERP) is a cross-functional enterprise system that serves as a framework to integrate
and automates many internal business processes and information systems within the manufacturing, logistics,
distribution, accounting, finance, and human resources functions of a business.
Figure 6.5 (Fig 4.4) shows the major application areas of an ERP system
Figure 6.6 (Fig 4.5) shows some of the cross-functional business processes and supplier and customer information
flows supported by ERP systems.
Characteristics of ERP software include:
 Gives an integrated real-time view of core business processes such as production, order processing, inventory
management tied together by ERP application software and a common database maintained by a database
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management system.
They track business resources like cash, raw materials, production capacity and the commitments made by the
business such as customer orders, purchase orders and employee payroll no matter which department
(manufacturing, accounting, purchasing etc.) has entered the data onto the system.
Manufacturing process supported are material requirements planning, production planning and capacity
planning
Sales process supported are sales analysis, sales planning, pricing analysis
Distribution supported with order management, purchasing and logistics
Human resources supported with personnel requirements planning, salary and benefits administration
Support most financial record keeping and managerial accounting applications
Business value of ERP software: (p127)
 Quality and efficiency. ERP creates a framework for integrating and improving internal business processes
resulting in major improvements in customer service, production, and distribution efficiency.
 Decreased costs. Significant reduction sin transaction processing costs and hardware, software and IT support
staff compared to non-integrated systems.
 Decision support. ERP provides vital cross-functional information quickly on business performance to
managers to significantly improve their ability to make better business decisions across the enterprise.
 Enterprise agility. ERP breaks down many traditional departmental barriers resulting in a more flexible
organisation structure, managerial responsibilities and work roles creating a more agile and adaptive
organisation and workforce that can more easily capitalise on new business opportunities.
The Costs of ERP (not in old textbook)
Costs are considerable. Figure 6.8 illustrates the relative size and types of costs of implementing an ERP system.
Notice hardware and software costs are relatively small, developing new business processes and training are the bulk
of the costs.
Most implementations have been successful but failure can cause big loses in profits, revenue, market share. Los
orders, mistakes in inventory, out of stocks for weeks or months are very damaging.
Causes of ERP Failure (not in old textbook)
Underestimating the complexity of planning, development and training needed to prepare for a new ERP system that
will radically change business processes and information systems. Not involving users in planning and development
stages or change management programs, trying to do too much too fast. Insufficient training in new tasks, failure to
do enough data conversion and testing. Relying too much on the ERP software vendors or consultants to lead the
implementation.
Trends in ERP (not in old textbook)
Figure 6.9
Section III: Supply Chain Management: (page 132 old book)
Supply chain management (SCM) is a management concept that integrates the management of supply chain
processes. Many companies are making SCM a top strategic objective of their E-business initiatives. Supply chain
management helps a company to:
 get the right products to the right place at the right time, in the proper quantity and at acceptable cost
The goal of SCM is to efficiently manage this process by:
 forecasting demand
 controlling inventory
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enhancing the network of business relationships a company has with customers, suppliers, distributors
receiving feedback on every link in the supply chain
To achieve these goals many businesses are using Internet technologies to Web enable their supply chain processes,
decision making and information flows.
What is SCM?
SCM is a cross-functional interenterprise system that uses information technology to help manage and support links
between some of a company’s key business processes and those of its suppliers, customers and business partners.
The goal of SCM is to create a fast, efficient and low cost network of business relationships, or a supply chain, to
get a company’s products from concept to market.
Each supply chain process should add value to the product or service the company produces so it is frequently called
a value chain (related but different to concept in Chapter 2). Many companies using Internet technologies to help
streamline this process.
Figure 6.11 (figure 4.8) shows basic business processes in supply chain lifecycle and the functional SCM processes
used to support them. Manufacturers are using their intranets, extranets and e-commerce web portals to re-engineer
their relationships with suppliers, distributors and retailers to:
 Reduce costs
 Increase efficiency
 Improve supply chain cycle times
 Improve performance in relationships with customers and suppliers
Electronic Data Interchange: (Chapter 5, p.186 old textbook)
Electronic data interchange (EDI) involves the electronic exchange of business transaction
documents over the Internet and other networks between supply chain trading partners
(organizations and their customers and suppliers). Data representing a variety of business
transaction documents (PO, invoices, quotations, shipping notices) are automatically exchanged
between computers using standard document message formats.
Typically EDI software is used to convert a company’s own document formats into standardized
EDI formats as specified by various industry and international protocols. Example of an almost
complete automation of an e-commerce supply chain process. EDI over the internet, using
VPN’s, is a growing B2B e-commerce application.
Formatted transaction data are transmitted over network links directly between computers,
without paper documents or human intervention. Besides direct network links between the
computers of trading partners, third-party providers of EDI services are widely used. Figure 6.12
(Figure 5.21)
EDI automatically tracks inventory changes, triggers orders, invoices and other documents
related to transactions, schedules and confirms delivery and payment. By digitally integrating the
supply chain, EDI streamlines the process, saves time and increases accuracy. Using internet
technologies means lower cost EDI services are now available to smaller businesses.
EDI still popular but slowly being replaced by XML-based Web services.
The Role of SCM (Not in old textbook)
Figure 6.13
Strategic, tactical and operational SCM objectives and outcomes accomplished by the execution
level. Role of information technology in SCM is to support these objectives to produce the
outcomes a business needs to effectively manage its supply chain.
Figure 6.14 shows the planning and execution functions and outcomes provided by SCM
software (mySAP).
Benefits and Challenges of SCM
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Faster, more accurate order processing
Reductions in inventory levels
Quicker time to market
Lower transaction and material costs
Strategic relationships with suppliers
All help the company be more agile and responsive in meeting customer demands and needs
of business partners.
Developing effective SCM systems has proven difficult and complex. Achieving the business
value goals has been a major challenge. Figure 6.15 (Figure 4.9) shows goals and objectives.
Problems in SCM are lack of proper demand planning knowledge, tools and guidelines.
Inaccurate or overoptimistic demand forecasts cause production, inventory and other problems no
matter how efficiently the rest of the SCM process is constructed.
Inaccurate production and inventory data frequently cause SCM problems. As does lack of
collaboration between marketing, production and inventory teams and suppliers and distributors.
SCM tools themselves are considered immature, incomplete and hard to implement by many
companies.
Trends in SCM (not in old textbook)
Figure 6.16 shows three possible stages in implementation of SCM.
First stage – concentrate on improvements to internal supply chain processes and its external
process and relationships with suppliers and customers. E-commerce Web site to provide access
to online catalogues and useful supply chain information while supporting limited online
transactions.
Stage two – use selected SCM software internally and externally via intranet and extranet links to
suppliers, distributors and customers. Also concentrate on expanding the business network of
Web-enabled SCM-capable trading partners to increase efficiency and effectiveness.
Stage three – develop and implement collaborative SCM applications using advanced SCM
software, fulfilment service extranet links and private and public e-commerce exchanges. Egs.
Product design, planning, forecasting and replenishment (CPFR). Also collaborative marketing,
sales and service applications with trading partners may be developed.
KEY TERMS AND CONCEPTS - DEFINED
Accounting Systems:
Information systems that record and report business transactions, the flow of funds through an organization, and
produce financial statements. This provides information for the planning and control of business operations, as well
as for legal and historical record-keeping.
Accounts Payable:
A record of purchases from suppliers.
Accounts Receivable:
A record of amounts owed by customers.
Batch Processing:
A category of data processing in which data is accumulated into “batches” and processed periodically.
Collaborative Manufacturing Networks:
Collaborative manufacturing networks involve using the Internet, intranets, extranets, and other networks to link the
workstations of engineers and other specialists with their colleagues at other sites.
Computer-Aided Manufacturing:
The use of computers to automate the production process and operations of a manufacturing plant. Also called
factory automation.
Computer-Integrated Manufacturing:
An overall concept that stresses that the goals of computer use in factory automation should be to simplify, automate,
and integrate production processes and other aspects of manufacturing.
Cross-Functional Integrated Systems:
Information systems that are integrated combinations of business information resources across the functional units of
an organization.
Customer Relationship Management:
CRM is described as a cross-functional E-business application that integrates and automates many customer serving
processes in sales, direct marketing, accounting and order management, and customer service and support.
E-Business:
E-business is the use of the Internet and other networks and information technologies to support electronic
commerce, enterprise communications and collaboration, and web-enabled business processes both within an
internetworked enterprise, and with its customers and business partners.
E-Business: Application Architecture
Using the Internet and other networks for E-commerce, collaboration, and business process. Businesses use these
technologies to establish interrelationships to each other and to customers, employees, business partners, and other
stakeholders of an internetworked E-business enterprise.
Enterprise Application Integration:
A cross-functional E-business application that integrates front-office applications like customer relationship
management with back-office applications like enterprise resource management.
Enterprise Resource Planning:
Using integrated cross-functional software to reengineer, manufacturing, distribution, finance, human resources and
other basic business processes of a company to improve its efficiency, agility, and profitability.
Financial Management Systems:
Information systems that support financial managers in the financing of a business and the allocation and control of
financial resources. Includes cash and securities management, capital budgeting, financial forecasting, and financial
planning.
Financial Business Systems:
Information systems that support financial managers in the financing of a business and the allocation and control of
financial resources. Include cash and securities management, capital budgeting, financial forecasting, and financial
planning.
General Ledger:
A collection of financial records of a firm.
Human Resource Systems:
Information systems that support human resource management activities such as recruitment, selection and hiring,
job placement and performance appraisals, and training and development.
Interactive Marketing:
A dynamic collaborative process of creating, purchasing, and improving products and services that builds close
relationships between a business and its customers, using a variety of services on the Internet, intranets, and
extranets.
Inventory Control:
The activity of monitoring and controlling the inventory.
Machine Control:
The technology of controlling machine tools by computers.
Manufacturing Execution Systems:
MES are performance monitoring information systems for factory floor operations. They monitor, track, and
control the five essential components involved in a production process: materials, equipment, personnel, instructions
and specifications, and production facilities.
Manufacturing Systems:
Information systems that support the planning, control, and accomplishment of manufacturing processes. This
includes concepts such as computer-integrated manufacturing (CIM) and technologies such as computer-aided
manufacturing (CAM) or computer-aided design (CAD).
Marketing Systems:
Information systems that support the planning, control, and transaction processing required for the accomplishment
of marketing activities, such as sales management, advertising and promotion.
Online Accounting Systems:
Online accounting information systems are using the Internet, intranets, extranets, and other networks to be directly
involved in the processing of transactions between a business and its customers and suppliers.
Online HRM Systems:
Online HRM systems are using the Internet to actively recruit for employees through recruitment sections of their
corporate web sites and commercial recruitment services and databases on the World Wide Web.
Online Investment Systems:
Online investment systems are using the Internet and other networks in order to make buying, selling, or holding
decisions for each type of security so that an optimum mix is developed that minimizes risk and maximizes
investment income for the business.
Online Transaction Processing Systems:
A realtime transaction processing system.
Order Processing:
The activities involved in processing orders from customers.
Payroll:
A record of the employees to be paid and the amount due to each.
Process Control:
The use of a computer to control an ongoing physical process such as petrochemical production.
Realtime Processing:
Data processing in which data is processed immediately rather than periodically. Also called online processing.
Robotics:
The technology of building machines (robots) with computer intelligence and human like physical capabilities.
Sales Force Automation:
The use of computers to automate sales recording and reporting by sales people, as well as communications and sales
support.
Supply Chain:
The network of business processes and interrelationships among businesses that are needed to build, sell, and deliver
a product to its final customer.
Supply Chain Management:
Integrating management practices and information technology to optimize information and product flows among the
processes and business partners within a supply chain.
Targeted Marketing:
Targeted marketing has become an important tool in developing advertising and promotion strategies for a
company’s electronic commerce web sites. Targeted marketing includes five targeting components: community,
content, context, demographic/psychographic, and online behavior.
Transaction Processing Cycle:
A cycle of basic transaction processing activities including data entry, transaction processing, database maintenance,
document and report generation, and inquiry processing.