ERP & SCM & CRM
Information Technology and Business
Minder Chen, Ph.D.
Minder.chen@csuci.edu
Martinique Landscape, Paul Gauguin
© Minder Chen, 1996-2005
E-Business - 1
The Extended Enterprise
Buy
Suppliers
Make/Add Value
Back
Office
Sell
Front
Office
Customers
E-Business: Virtual and Dynamic Enterprise
Manufacturing
Finance, HR
Engineering
Supply Chain
Sales
Support/Service
Marketing
Back Office Integration
Demand Chain
Supply Chain Management
Customer Relationship Management
Enterprise Resource Planning
©
© Minder
MinderChen,
Chen,2001-2002
1996-2005
E-Business - 2
A Federation of Information Systems
B2C
B2B
Customer Relationship Management (CRM)
(Service)
B2B
© Minder Chen, 1996-2005
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ERP
Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport
© Minder Chen, 1996-2005
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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
E-Business - 5
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
E-Business - 6
What is ERP?
• Software application packages
• Manage business processes and functions
– Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting,
HR
• Allow automation and integration of business
processes
• Enable 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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Integrated Systems Approach
• Common set of applications/modules
• Usually requires the reengineering business
processes according to ERP package’s
underlying business model (reference model)
– Better alignment
• Limit your customization
– Easier during version upgrades
• Overcomes inefficiencies of independent
systems
• Integrated data supports multiple business
functions
© Minder Chen, 1996-2005
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Major Vendors
• 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
http://panorama-consulting.com/resource-center/2010-erp-vendor-analysis/
© Minder Chen, 1996-2005
E-Business - 10
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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ERP Market Share
Tier I
SAP
Oracle
Oracle eBusiness Suite
Oracle JD Edwards
Oracle Peoplesoft
Misrosoft Dynamics
Sample Vendors
Tier II
Epicor
Sage
Infor
IFS
QAD
Lawson
CDC Software
http://whatiserp.net/erp-comparison/erp-vendor-evaluation-2010/
© Minder Chen, 1996-2005
Tier IIII
ABAS
Activant Solutions Inc.
Bowen and Groves
Compiere
Exact
NetSuite
Visibility
CGS
Hansa World
Consona
Syspro
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/ Web-enabled architecture
© Minder Chen, 1996-2005
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The Basic Instance of SAP
© Minder Chen, 1996-2005
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Candidate HR Instance of SAP
© Minder Chen, 1996-2005
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Sap modules
© Minder Chen, 1996-2005
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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
Purchase
requisite.
Logistics Controlling
Delivery
Planned
order
Vendor
selection
Purch .
order
Customer
payment
Invoicing
Prod.
order
Prod.
control
Goods
issue
Invoice
verificat.
Vendor
payment
Sales, Production, Purch., Warehouse Mgmt
SOP: Sales and Operations Planning MPS: Master Production Schedule;
MRP: Material Requirements Planning
© Minder Chen, 1996-2005
http://134.198.33.115/sap/1000.htm
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R/3 Logistics Process Flow
© Minder Chen, 1996-2005
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Collaborative Business Map
© Minder Chen, 1996-2005
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E-Business Building Blocks
© 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
Please also refer to for Selection ERP Software
http://en.wikipedia.org/wiki/ERP_System_Selection_Methodology
© 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
E-Business - 23
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
© Minder Chen, 1996-2005
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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
E-Business - 25
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
Customize
the package
Achieving Fit between PEAS and Business needs
Assess and
Explore PEAS
Gap
Assess and
Explore
Processes
Agree on
Redesigned
Processes
Changes
to PEAS
Changes
to
Process
Application
Infrastructure
Managerial
Benefits
Strategic
Benefits
IT infrastructure
Benefits
Sophisticated
Knowledge
Monitor Changing
Conditions &
Reevaluate
Benefits
Use ES to
Generate
Benefits
Operational
Benefits
Initiatives to
Manage the
Distinctive
Characteristics of
the PEA Software
Organizational
Benefits
Reengineer
processes
E-Business - 26
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
E-Business - 27
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
E-Business - 28
SCOR Reference Model
The Supply Chain Council (SCC) developed a Supply Chain Operations Reference Model (SCOR) as
a cross-industry process reference model for supply chain management.
© Minder Chen, 1996-2005
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Supply Chain Management
Procurement
© Minder Chen, 1996-2005
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A Case Study
• Used CNET.com for reviews and vendors list of
a Tablet PC via
• Called BestBuy government and education sale
• Confirmed order
• Later told that they it did not have it in stock at
the promised delivery date.
• Order cancelled but then shipped by UPS
without obtaining a signiture.
• Took two days to get authorized return
• Ordered from another vendor, and shipped by
FedEx, missed the delivery, went to FedEx
station to pickup
© Minder Chen, 1996-2005
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Fulfillment by Amazon
• http://www.amazonservices.com/content/fulfill
ment-by-amazon.htm#how-it-works
© Minder Chen, 1996-2005
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Bullwhip Effect in Supply Chain
© Minder Chen, 1996-2005
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Demand-Driven Supply Chain
SCM
© Minder Chen, 1996-2005
ERP
CRM
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Increasing Variability of Orders up the Supply Chain
The Bullwhip Effect in Supply Chains, Hau L. Lee, V. Padmanabhan and Seungjin Whang, Sloan Management Review, April 15, 1997
© Minder Chen, 1996-2005
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Higher Variability in Orders from Dealer to Manufacturer than Actual Sales
© Minder Chen, 1996-2005
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Bullwhip Effect due to Seasonal Sales of Soup
© Minder Chen, 1996-2005
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A Framework for Supply Chain Coordination Initiatives
© Minder Chen, 1996-2005
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B2B Data Exchange: Existing Methods - EDI messages
• UN standard format (EDIFACT) or X.12
• Compact strings, with numeric qualifiers. Strict limitation on the
number of characters and position of data in a document.
• Example:
• UNH+900576+ORDERS:D:93A:UN:EAN007’BGM+220+H940568’DTM
+137:19940201:102’
NAD+BY+5412345000176::9’NAD+SU+4012345000094::9’LIN+2’PIA
+5_1857990455:IB’
IMD+F+BAU+:::Farell J G’IMD+F+BTI+:::The Singapore
Grip’QTY+21:1’
PRI+XXX:7.99’UNS+S’CNT+2:2’UNT+15+900576’
• Rules for data type control
© Minder Chen, 1996-2005
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XML
eXtensible Markup Language
© Minder Chen, 1996-2005
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EDI and XML
EDI
VAN
EDI
XML
© Minder Chen, 1996-2005
EDI
XML
E-Business - 41
BizTalk
© Minder Chen, 1996-2005
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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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e-Procurement Case Study
eProcurement
User Interface Subsystem
eProcurement
(Web Interface)
Application
eProcurement
(Windows
Interface)
Application
(Mobile Interface)
eProcurement
Agent
(implemented in Web
Services)
Public
UDDI
Repository
Management
Subsystem
Internet
Web Services
Repository Interfaces
Procurement
Web services
Registry
© Minder Chen, 1996-2005
Web Services
Provided by supplier N
Web Services
Provided by supplier …
Web Services
Provided by supplier 1
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Data Model of the Private
Web Services Registry
© Minder Chen, 1996-2005
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© Minder Chen, 1996-2005
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Prototype
© 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
© Minder Chen, 1996-2005
E-Business - 48
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, 1996-2005
E-Business - 49
Highest Level Business Flow
Source: Oracle.
© Minder Chen, 1996-2005
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CRM Framework
Key Events
The Moment of Truth (MOT)
==
KPI and continuously improvement
© Minder Chen, 1996-2005
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RFM and LTV
• Recency - How recently a customer has
purchased?
• Frequency - How often he purchases?
• Monetary Value - How much does she spend?
Source: http://en.wikipedia.org/wiki/RFM and http://www.jimnovo.com/RFMtour.htm
• Life Time Value(LTV) or Lifetime Customer
Value (LCV)
Source: http://en.wikipedia.org/wiki/Customer_lifetime_value
http://www.jimnovo.com/LTV.htm
© Minder Chen, 1996-2005
E-Business - 52
CRM Architecture
© Minder Chen, 1996-2005
E-Business - 53
Digital Dashboard for Sales Process
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.
E-Business - 54
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.
ERP, CRM, SCM Implementation
Software
• Package (proprietary or open source)
• Hosting Solution (SaaS)
• Custom-build
Staffing
• In house staff
• Systems integration/Consulting firm
• Onsite / onshore / near shore/ offshore
outsourcing
• Reshoring
© Minder Chen, 1996-2005
E-Business - 56
Classification of Outsourcing: Service Types
• Manufacturing Outsourcing
– FoxConn’s eCMMS stands for e-enabled
Components, Modules, Moves and Services
– TSMC emphasizes collaborative services*
•
•
•
•
Information Technology Outsourcing
Business Process Outsourcing
Knowledge Processing Outsourcing
Innovation Outsourcing
Smart sourcing: Beyond “lift and shift”.
*See http://www.tsmc.com/english/c_services/c00_Service_Guide/c0100_Service_Guide.htm
© Minder Chen, 1996-2005
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Backup Slides
© 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
© Minder Chen, 1996-2005
E-Business - 60
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
E-Business - 61
SAP pursues a global purchasing strategy
© 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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Strategy
Development
Process
Value Creation
Process
Multi-channel
Integration
Process
Performance
Assessment
Process
Information Management Process
© Minder Chen, 1996-2005
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© Minder Chen, 1996-2005
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