Competition, Strategy & IT
Dr. Michael Williams
MBAM 603
Fall 2007
Class Agenda
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6:00- Introduction
6:10- Quiz
6:20- Presentation
7:05- Debriefing
7:20- Break
7:35- EPR/CRM
8:35- Strategy & IT
9:40- Self-reflection
1:00- Introductory comments
1:10- Quiz
1:25
Presentation - ERP
2:15- Break
2:30- ERP Review
3:00- Presentation - CRM
3:45- Break
4:00- Presentation Review
4:15 - Customer Relationship
Managemet
4:40- Self-Reflection
Quiz
Finishing ERP…
Why ERP?
The Silo Organization
Mktng
Sales
Mfgr.
Acct.
HR
ENTERPRISE SYSTEM
= Data reqs.
= Information Systems
Dist
ERP Primer
• What is ERP?
– ENTERPRISE resource planning
– Generic representations of typical
business processes (e.g., financials,
HR, manufacturing)
• What are the benefits of ERP?
– Shared data
– Shared interfaces
– Best practices
ERP Vendor/Products
• Who are the primary vendors of
ERP systems?
– SAP
– Oracle / PeopleSoft / JDEdwards
– Many niche players (e.g., SCT)
• What is the ERP Product line?
– Usually varies by industry
• An example- OneStart at IU
ERP Costs
• Varies widely based on
– Firm size, Existing IT infrastructure,
Organizational complexity, Functional
modules (e.g., financials, HR…), Amount of
process redesign
• According to a study by Meta Group
(survey of 124 firms)
– Average implementation time took 24
months
– Hi=$300 Million, Low=$400,000,
Average=$15 Million or $53,320/user
– However, it returned a median annual
savings of $1.6 million/year
ERP Costs (Cont.)
• Software expenses are often a SMALL
piece of the expense
– Implementation costs range from 5x to 10x the
price of software itself!
• Don’t overlook the costs of
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Training
Integration/Testing
Consultants
Data Conversions
Increased HR values/costs
Extended ROI cycles
ERP Costs (Cont.)
• Training is a big, and necessary expense
– 17% of the total cost should be training.
– Companies that budget less than 13% of their
costs for training are three times more likely to
see their ERP projects run over time and over
budget when compared with companies that
spend 17% or more on training.
http://techrepublic.com.com/5100-6315_11-1054263.html
ERP Failures
• Many ERP implementation fail
– Well-known examples include Hershey’s
Food, Whirlpool, FoxMeyer Drug
• However, this is almost NEVER an IT
problem but a management problem
So, Managers Beware
• Carefully review your processes to
decide which, if any, to keep.
• Select powerful champions across
functions.
• What cultural clashes will
standardized data create? How will
you overcome those?
• What are the ethical (i.e., power)
considerations of the project?
Customer Relationship
Management
A review of how technology
enables closer relationships with
customers
…a little history
Technology tends to move in waves…
Early 2001 -
1990’s - ERP
Then…
What’s the problem?
• Who are your customers?
• What do they want?
• How can you drive demand for your
products?
• What new products would be most
appealing to them?
• What ad dollars $ drive new sales?
The changing face of IT
Angels & Demons
• CRM is more of a mindset than a
single system.
– “Customer Relationship Management”
– A strategy that uses IT to capture and
manage information about customers’
needs and behaviors in order to
develop stronger ties to them.
• CRM helps firms to identify and
manage both “angel” and “demon”
customers.
Comparing Customers
Sales
Marketing Customer Returns Customer
Service
Decision
Under $300
5 Touches
Low
High
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Average $500
3 Touches
High
Low
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Why manage customer relationships?
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Segmentation
Prioritization
Acquisition
Customization
Personalization
Anticipation
• Education
• Innovation
• Cross- and UpSelling
• Loyalty through
delight, value and
relationship
• Retention
CRM Market: What is CRM?
PACE
CRM
B
CRM-Sales Force Automation
• What information and processes does
management need from sales staff?
• What information and processes do sales
staff need to achieve superior results?
CRM-Customer Service
Communication Efforts
WITHOUT
WITH CRM
Customer Information
Web
Web
Email
Email
Catalog
The Firm
Catalog
Phone
Phone
Store
Store
CRM - Marketing Automation
The effective management and tracking of all marketing media to
personalize your message to each customer and
increase marketing ROI.
CRM Components
Optimized Customer Contacts
Develop and implement business
processes to ensure consistent, highquality, and tailored interactions with
customers that increases customer
satisfaction and collects valuable data on
their needs and preferences.
Customer Knowledge Management
Capture, analyze, and apply information
about customer needs, behavior, and
transaction history needs to maximize
value delivered to the customer and value
captured by the firm across the customer
lifecycle.
CRM
Collaborative Organization
The organization must evolve a consistent
customer-centric philosophy across human
resource management and internal
communications.
Integrated Technology
A comprehensive integrated technology
architecture must be put in place that cuts
across existing organizational boundaries
and is founded upon a customer-centric
view of the business.
CRM Technologies
• No single “CRM” technology, but there are attempts at onestop CRM solutions
– Microsoft CRM
– Oracle/Siebel Systems
– SalesForce.com
• Some “CRM” technologies include
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Data warehouse
Data mining
Intelligent agents
Unified marketing management
Unified Multi-channel customer contact technologies (web,
email, chat, voice)
– Contact management
– Web-based customer self-service
CRM Costs
• It depends on your “target”
• Single applications can cost as little as
$10,000-$50,000. But these usually don’t
provide too much value.
• CIO Magazine’s 2001 survey found that
50% of firms (n=1600) had a CRM budget
of less than $500,000.
• That same survey showed some firms
spend > $10 M on CRM projects.
Benefits of CRM
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Discover, Acquire, and Retain Customers
Increase Customer Satisfaction and Profitability
Help Sales Staff Close Deals Faster
Cross Sell Products More Effectively
Make Call Centers More Efficient
Simplify Marketing and Sales Processes
Purchase Inventory with Better Accuracy
Allocate Labor Dollars More Strategically
Streamline the Supply Chain
Where and How to Start?
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Give every customer a unique ID
Capture transaction data
Capture human insights
Create and articulate a customer strategy
Create a customer-focused organization
Identify useful information & benefiting users
Provide simple, fast, convenient access to customer
information and knowledge
• Don’t irritate or stalk customers & employees
• Start small, solve problems, add value,
build on successes
CRM Target and Lessons
What was unique, interesting,
insightful, or revelatory about the
Goodhue et al. article?
CRM Targets
Install individual customer-oriented
applications (e.g., database marketing 56%,
call centers 53%, web portals 40%…)
Build CRM infrastructure into organization
(e.g., network and consistent data)
Transform the organization to customer
centered (e.g., process redesign)
Source: Goodhue et al., 2002 MISQE 1:2
CRM Lessons
1. Each target has unique costs and
benefits
2. Sponsorship varies by target
3. Each target evolves
4. Each target is messy
5. Scalability is key since each target
evolves
6. Targets involve increasing role from
users
Presentation Review
Get together with your teams
and answer the following.
• What was the most
compelling content provided
in the presentation?
• What content area of the
presentation needed more
development?
• What can you learn from
this to improve your next
presentation?
Post your answers in the
Discussion Board in Bb
For the presenting team,
answer the following:
– What did I learn about myself
from this team experience?
– What did I learn about
working with others from this
team experience?
– What will I do differently next
time?
Post your answers in the Digital
Dropbox.
Team Exercise
• In your teams, review the Tesco, UK case
on p. 59 in the textbook. (10 minutes)
– Discuss the three questions following the brief
case.
– Post your responses in Blackboard.
Self Reflection
…every experience in life enriches
one’s background and should teach
valuable lessons.
Mary Gilson, Economist
What’s Past is Prologue 1940
IT & Strategy
Strategy and IT
How are / might
Information and Process Systems
help your firm address these
strategic challenges and opportunities?
Achieving a Competitive Advantage
Strategy and the Internet
What was unique, interesting,
insightful, or revelatory about the
Porter article?
Strategy and the Internet
• With your team identify and define at least
6 terms in the Porter paper that are new
and relevant (i.e., switching costs, barrier
to entry…)
Discussion Questions
In your teams discuss the following and submit
your answers to Blackboard:
• Who will capture the economic benefits that the
Internet creates?
• Will all the value end up going to customers, or
will companies be able to reap a share of it?
How?
• What is the Internet’s impact on industry
structure?
Happy Birthday!