Enterprise Resource Planning and Customer Relationship Management (ERP and CRM) Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics CSU Channel Islands Minder.Chen@CSUCI.EDU ERP Market ERP: Enterprise Resource Planning http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-update-sap-solidifies-market-leadership/ © Minder Chen, 1996-2014 ERP & CRM - 2 Major Global Software Firms Source: http://www.forbes.com/global2000/list/ under software and programming ERP & CRM - 3 © Minder Chen, 1996-2014 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, 1996-2014 ERP & CRM - 4 What is ERP? • Enterprise-wide application packages • Manage business processes/functions via various modules – Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR • Allow automation and integration of business processes • Enable data and information sharing • Incorporate and implement “best practices” © Minder Chen, 1996-2014 ERP & CRM - 5 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, 1996-2014 ERP & CRM - 6 Major Vendors • SAP – SAP Business One http://en.wikipedia.org/wiki/SAP_Business_One – http://www.sap.com/solutions/business-suite/erp/demos/index.epx • Oracle e-Business Suite – PeopleSoft • 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 http://en.wikipedia.org/wiki/List_of_ERP_vendors © Minder Chen, 1996-2014 ERP & CRM - 7 Other Vendors (II) • QAD: Providing innovative enterprise software and services for global manufacturers – http://www.qad.com/erp/ • Salesforce.com for CRM – Software as a service (SaaS) Cloud computing – 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, 1996-2014 ERP & CRM - 8 Anatomy of an Enterprise System Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport © Minder Chen, 1996-2014 ERP & CRM - 9 Integrated Systems Approach • Common set of applications/modules • Overcomes inefficiencies of independent systems • Integrated data supports multiple business functions • Limit your customization – Easier upgrades • Consider reengineering business processes according to ERP package’s underlying business model (reference model / blueprint) – Better alignment, best practices, less customization ERP & CRM - 10 © Minder Chen, 1996-2014 / Web-enabled architecture © Minder Chen, 1996-2014 ERP & CRM - 11 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, 1996-2014 Goods Receipt Sales and Distribution Transfer Posting R ERP & CRM - 12 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 SOP: Sales & Operations Planning; MPS: Master Production Schedule http://134.198.33.115/sap/1000.htm © Minder Chen, 1996-2014 ERP & CRM - 13 MRP Information Flow Outstanding Purchase Orders Purchase Requisition Demand Management (MPS) Sales Planning & Forecasting Stock (Inventory) MRP 1 Bill of Materials (BOM) 2 3 4 5 A B C E F LT: Lead Time © Minder Chen, 1996-2014 ERP & CRM - 14 6 R/3 Typical Business R/3 SAP Logistics Process Flow Blueprint © Minder Chen, 1996-2014 ERP & CRM - 15 Commercial Application Package’s 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-theshelf (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. Source: Preparing and Evaluating A Request for Proposals: How to Select a Vendor (link) © Minder Chen, 1996-2014 ERP & CRM - 16 Gap Analysis and Strategies to Reduce Gaps Assess and explore ERP Packages’ functionality & its underlying Reference Model Big gap Develop a custombuilt solution Gap Analysis Small gap Define business requirements and the firm’s processes / procedures / business rules AS-IS vs.TO-BE Select the best fit ERP package Conduct detailed gap analysis & Determine ways to reduce the gap Assume the selected ERP package has the best practices © Minder Chen, 1996-2014 Consider costs of customization and future upgrades Customize the package Redesign the firm’s business processes ERP & CRM - 17 The Flow of Your Implementation Process This process assumes that a software package has been selected. 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, 1996-2014 ERP & CRM - 18 Why Do ERP Projects Often Fail? • Under-estimate the complexity of planning, development, and training for ERP implementation. • Fail to involve affected employees in planning and implementation • Try to do too much too fast • Provide insufficient training for ERP users • Do not conduct sufficient data conversation and testing • Rely too much on ERP vendors or consultants (you cannot outsource your problems away) http://ramialsindi.wordpress.com/2011/10/24/week-10-enterprise-resource-planning/ © Minder Chen, 1996-2014 ERP & CRM - 19 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 and follow a proven formula • Understand the system’s capabilities • Explore new technology solutions • Execute your implementation in phases • Customize by prototyping • Maintain a close relationship with your vendors © Minder Chen, 1996-2014 ERP & CRM - 20 ERP Benefits Framework Source: Shari Shang & Peter Seddon, Assessing and managing the benefits of enterprise systems: the business manager’s Perspective, Info Systems Journal, (2002) 12, pp. 271–299 ERP & CRM - 21 at © http://cba.uah.edu/guptaj/m680/erpbenefits.pdf Minder Chen, 1996-2014 Benefits Achieved by Organizations Improved financial management Faster, more accurate transactions Better managerial decision making Improved inventory & asset mgt Ease of expansion & increased flexibility Improved logistics Cycle time reduction Improved customer service Headcount reduction Increased revenue © Minder Chen, 1996-2014 ERP & CRM - 22 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 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 Operational Benefits Managerial Benefits Strategic Benefits IT infrastructure Benefits Sophisticated Knowledge Application Infrastructure Net Benefits from ES Use Monitor Changing Conditions & Reevaluate Benefits Use ES to Generate Benefits Source: Shari Shang and Peter Seddon © Minder Chen, 1996-2014 Initiatives to Manage the Distinctive Characteristics of the PEA Software Organizational Benefits ERP & CRM - 23 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". Under Promise and over Deliver Design Source: Ross & Vitale (1998) Low employee morale due to extra work, mismatched processes, data errors and change pressures • 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, 1996-2014 ERP & CRM - 24 Why Do Problems Occur after "Go Live"? Factors that might explain why problems occur after go live (packages or websites): 1. Poor project management including poor decisions regarding requirements and design specifications during the implementation project 2. Inappropriate software choice and configuration, resulting in poor fit 3. Lack of business and technical knowledge on part of implementation team and users 4. Lack of testing before “go live” 5. Poor change management The star witness HealthCare.Gov went live Oct. 1, 2013 © Minder Chen, 1996-2014 ERP & CRM - 25 Customer Relationship Management (CRM) “The purpose of a business is to get and keep customers. ”* - Peter Drucker Watch https://www.salesforce.com/form/conf/crm-sales-indexpage-demo.jsp *Source: http://www.forbes.com/sites/petercohan/2012/10/01/four-ways-start-ups-can-get-and-keep-customers/print/ ERP & CRM - 26 © Minder Chen, 1996-2014 Customer Relationship Management (CRM) The measures an organization takes to – – – – – – Identify, Select, Acquire, Work with, Retain Grow its customers Companies spend two to 20 times as much finding new customers as they do keeping old ones. © Minder Chen, 1996-2014 ERP & CRM - 27 Customer Relationship in Business Model Canvas Source: Steve Blank, The Startup Owners Manual. http://www.businessmodelgeneration.com/canvas © Minder Chen, 1996-2014 ERP & CRM - 28 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) © Minder Chen, 1996-2014 ERP & CRM - 29 Customer Management Activities Touch Points Moments of Truth (MOT) © Minder Chen, 1996-2014 ERP & CRM - 30 Highest Level Business Flow Source: Oracle. http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/ © Minder Chen, 1996-2014 ERP & CRM - 31 Get, Keep, and Grow Customers Source: Steve Blank, The Startup Owners Manual. © Minder Chen, 1996-2014 ERP & CRM - 32 Complexity of CRM /service Source: http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/ © Minder Chen, 1996-2014 ERP & CRM - 33 CRM Architecture Collaborative CRM Operational CRM Analytical CRM ODS: Operational Data Stores © Minder Chen, 1996-2014 ERP & CRM - 34 An Open Source CRM Solution ERP & CRM - 35 Source: © Minderhttp://www.sugarforge.org/screenshots/screenshot.php/6/1861/fullsize/Accounts.jpg Chen, 1996-2014 © Minder Chen, 1996-2014 ERP & CRM - 36 Salesforce.Com Example 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, 1996-2014 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. ERP & CRM - 37 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, 1996-2014 ERP & CRM - 39 ERP-CRM-SCM Implementation Software • Package (proprietary or open source) • Hosting Solution (SaaS) • Custom-built Development Teams/Staffing • In-house staff • Outsourcing firms: – Systems integrator/IT consulting firm (onsite vs. offsite) – Offshoring: SI firms outside US (e.g., Tata Consultancy Services, Wipro, Infosys) – BPO (Business Process Outsourcing) vs. ITO © Minder Chen, 1996-2014 ERP & CRM - 40 Backup Slides © Minder Chen, 1996-2014 ERP & CRM - 41 A Taxonomy for System Development Methodologies & Strategies © Minder Chen, 1996-2014 ERP & CRM - 42 Sucessive Platforms for Enterprise Applications ERP & CRM - 43 Source: IDC, at http://resources.idgenterprise.com/original/AST-0104779_IDC_SAP_and_the_transition_to_the_3rd_platform_for_enterprise_applicatio_.pdf © Minder Chen, 1996-2014 http://www.flickr.com/photos/softwareinsider/10670994216/sizes/o/in/photostream/ ERP & CRM - 44 © Minder Chen, 1996-2014 Commercial Application Package Implementation Strategy © Minder Chen, 1996-2014 ERP & CRM - 45 © Minder Chen, 1996-2014 ERP & CRM - 46 Social Media CRM • "Companies have departments dedicated to surfing the Internet and making sure their brands are protected," says Sherry. • Many firms have separate Twitter handles for help, such as @ComcastCares, @DeltaAssist, and @Zappos_Service. AT&T invites consumers to use Facebook and Twitter to reach the company, calling the service "social media customer care." © Minder Chen, 1996-2014 ERP & CRM - 47 Customer Management Activities © Minder Chen, 1996-2014 ERP & CRM - 48