Chapter 8
Business Across the
Enterprise
Getting All the Geese Lined Up:
Managing at the Enterprise Business
Level
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).
2
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
channels
CRM helps identify and reward the best
customers
3
II. CRM Features
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
Marketing and Fulfillment – automate
direct marketing, scheduling, and tracking,
and assist in scheduling responses and
requests, while capturing relevant
information for the marketing database
4
II. CRM Features
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
product/service
Contact and Account Management –
capture and track relevant data about past
and planned contacts
5
II. CRM Features
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
experiences
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 again
6
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
customers
7
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
systems
Lack of end-user incentives leading to low user
adoption rates
8
VI. Trends in CRM
Firms must create tighter linkages with
customers while enhancing the customer
experience
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
9
ERP
ERP is a multifunctional enterprisewide
backbone that integrates/automates
business processes and information
systems
What is ERP?
A cross-functional software suite
supporting basic internal business
processes of a firm
10
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
structures
11
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
12
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
partners
Adoption of Internet Technologies –enables
all the above
13
I. 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
SCM optimizes the effective/efficient
movement of materials between
suppliers, customers, and other partners 14
III. Benefits and Challenges of SCM
SCM solutions are becoming more complex
Benefits:
Faster, More Accurate Order Processing
Reductions in Inventory Levels
Quicker Times to Market
Lower Transaction and Materials Costs
Strategic Relationships with Suppliers
15
III. 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
Departments
16
IV. 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
Applications
17
Rolling IT Out:
Facilitating IT-enabled Change
18
Management is faced with two
conflicting situations…
• We must implement all necessary change
• We must resist all unnecessary change
• These pose a Management Challenge and
paradox
• How can we get employees to embrace
necessary change?
• How can we create an environment that allows
rational resistance?
19
19
Moving Through The Really Treacherous
Iceberg Prone Waters...
20
Rolling IT out!
• 40% of ERP projects fail
• Why do they fail?
• Why do they succeed?
21
21
22
What’s the worst plan you’ve
seen in dealing with
change???
23
23
The Navigational Guides
• Assess
• Anticipate
1
24
24
25
25
26
Assessing the Organization
•
•
•
•
•
•
•
•
•
•
Leadership style
Use of and sharing of information
Decision-making styles
Performance standards/expectations
Consequences of failure
Communication patterns
Norms/behaviors
Stories, traditions, myths, heroes
Space/layout
Symbols
27
27
CRISES
RED TAPE
STAGE
CONTROL
AUTONOMY
LEADERSHIP
EXISTENCE
SURVIVAL
YOUNG
EARLY
GROWTH
Age
MATURITY HARVEST
MATURE
28
28
Taking a Merlin view . . .
29
29
THE MERLIN FACTOR
A View From the Future
“Ah yes.” Merlin said, “How did I know to set
breakfast for two?... Now ordinary people are
born forwards in time, if you understand what I
mean, and nearly everything in the world goes
forward too. This makes it quite easy for
ordinary people to live... But unfortunately I
was born at the wrong end of time, and I have
to live backwards from in front, while
surrounded by a lot of people living forward from
behind...”
30
Source: Smith, C.E. “The Merlin Factor”.
30
Transition
Old Enterprise
New Enterprise
• Predictable Crisis
– Culture Change
– Confusion/Ambiguous Roles
– Changing Power/Influence
– Self Directedness vs. Control
– Reward Structure
– Lack of Clarity
31
31
Navigational Guide
Creating the Blueprints…
The Plan
2
32
32
Initial strategy development
• Top management support - Conditions for
success (including resources) have been
identified, committed to, and initiated
• Communication plan created for the
transformation
• Measurements for the change process and
outcome have been determined
• Strategy to create shared vision has been
developed
33
33
Initial strategy development (cont’d)
• Current change plans have been assessed
for they will impact employees
• Course correction strategy developed
• Temporary rewards for supporting the
change process have been designed
• Temporary change support structures,
policies, systems, and roles have been
designed
• External expertise (use of consultants)
34
34
Navigational Guide
Identify the Potential “Fatal Flaws” in the
Plan before Leaving the Dock
3
35
35
Connect the nine
stars using only four
straight lines and
never lifting your
pen!
36
36
37
37
Implementing the Plan
•
•
•
•
•
•
•
Management of expectations
Best people full-time on project
Business process re-engineering
Minimal customization
Information and access security
User participation
Interdepartmental co-operation and
communication
38
38
Implementing the Plan (cont’d)
•
•
•
•
Effective communications
Presence of champion
Monitoring and evaluating of performance
Software development testing and
troubleshooting
• Vendor / customer partnership
• Use of vendor development tools
(Adapted from “Critical Success Factors for
Implementing ERP System” by Teau Hai Mi)
39
39
Involving the Users
• Town Meetings
• Name That Project
– $100 gift certificate to local upscale restaurant
• User Teams
• Solicit Input
40
40
Written Communications
• Newsletters
• Project Website
– Information and documentation
• Project Listserve
– General project information
• Group Emails
41
41
Presentations and Demonstrations
• “About the Project” presentations
•
•
•
•
•
Why are we doing this?
How does this affect you?
What are we doing to avoid failure?
How can we all be involved?
Where can we find information about the project and
the system?
• Product demonstrations
• Pep Talk
42
42
Training
•
•
•
•
Class Designs
Student and Instructor Manuals
Class Materials
Web Learning Assistant
– On-Line Help
• Web-Based Training
– Interactive, simulation-type training
– On-demand
(Modify each of these based on branding)
43
43
Training (cont’d)
• Designed and developed course materials
using purchased materials as base
– Purchased materials geared more toward
centralized operations
• Progressive approach (Know what the users
need!)
– Beginners / Overviews
– Intermediate
– Advanced
• Sandbox (playtime) Database
– Mirrored classroom training database
– Refreshed daily
44
44
Navigational Guide
• Keep a Ready Eye to the Horizon
…Watch how the implementation is
progressing
4
45
45
The Reference Point
“Planning is
more important
than the plan”
General Dwight
Eisenhower
46
46
A large boat moving its rudder and
slowly changing direction versus…
47
47
a lone whitewater kayaker might shoot the
rapids of a river, dodging obstacles by
instinct and quick reflexes
48
48
Why Understand User
Resistance?
• At the root of many enterprise software project
failures
• Still a significant amount of user resistance even
after nine months of ERP integration testing
• Resistance was the second most important
contributor to time and budget overruns and was
the fourth most important barrier to SAP
implementation
• Users’ resistance can cause ES implementation
failures
• Low ES return on investments is
because of resistance
49
Common Myths
• You gradually wear down resisters.
Eventually everyone will embrace change.
• Change is a one-time thing. Once we make
the changes we need, everything will be
OK.
• They are employees, they should just get
on board
• Others have to change, not me.
• It’s really not that big of a change
• This isn’t personal
• We don’t have to involve them
• We will figure it out as we go
50
How would you respond…
1. “I don’t want to.” (the block)
2. “Tell me exactly what you want me to do.” (the
rollover)
3. “I’ll get on it first thing next week.” (the stall)
4. “Wow, what a great deal!” (the reverse)
5. “I think that the change would be better if it were
first implemented in X’s division/department.”
(the sidestep)
6. “X isn’t going to like this.” (projected threat)
7. “You owe me one.” (the press)
8. “See what you’re making me do.” (the guilt trip)
9. “But we’ve always done it the other way.” (the
tradition)
51
People Matter!!!
• The problem of reengineering…
• What value do we place on others?
• Fix yourself first – others follow.
52
52
It’s not enough to say employees
need to change. Management also
needs to change!
53
53