Information Systems Exam
Customer relationship management (CRM) enables an organization to:
 Provide better customer service
 Make call centers more efficient
 Cross sell products more effectively
 Help sales staff close deals faster
 Simplify marketing and sales processes
 Discover new customers
 Increase customer revenues
Recency, frequency, and monetary value:
 An organization can find it’s most valuable customers by using a formula that
industry insiders call RFM:
o Recency: How recently a customer purchased items
o Frequency: How often a customer purchases items
o Monetary value: How much a customer spends on each purchase
The evolution of CRM:
 Reporting: The first stage of CRM that serves the function of customer
identification.
 Analyzing: Second stage of CRM that serves the function of customer
segmentation.
 Predicting: Third and final stage of CRM that serves the function of customer
prediction.
o These stages progress as time goes on, and each further stage has
more business value than the one before it.
How to apply these stages, and why CRM matter more now than ever before:
 Reporting: “What happened?”
o “What is the total revenue by customer?”
o “How many units did we manufacture?”
o “What are our inventory levels?”
 Analyzing: “Why did it happen?”
o “Why didn’t sales meet forecasts?”
o “Why was production so low?”
o “Who are our customers?”
 Predicting: “What will happen?”
o “What customers are at risk or leaving?”
o “What products will the consumer buy?”
o “What transactions might be fraudulent?”
CRM business drivers:
 Automation/productivity/efficiency
 Competitive advantage




Customer demands/requirements
Increase revenues
Decrease costs
Customer support
Operational and Analytical CRM:
 Operational CRM: supports traditional transactional processing for day-today front-office operations or systems that deal directly with the customers.
o Takes care of front-end things such as sales systems, marketing
systems, and customer service.
 Analytical CRM: supports back-office operations and strategic analysis and
includes all systems that do not deal directly with the customers.
o Back-end processes such as data warehouse and data mining.
CRM success factors:
 Clearly communicate the CRM strategy
 Define information needs and flows
 Build an integrated view of the customer
 Implement in integrations
 Scalability for organizational growth
Enterprise resource planning (ERP)
 At the heart of all ERP systems is a database. When a user enters or updates
information in one module, it is immediately and automatically updated
throughout the entire system.
 ERP systems automate the business process by passing information from one
step to the next.
 ERP brings the organization together.
Integrating SCM, CRM, and ERP:
 SCM, CRM and ERP are the backbone of e-business
 Integration of these applications is the key to success for many companies
 Integration allows the unlocking of information to make it available to any
user, anytime, anywhere
Users and purpose of each system:
 CRM:
o Primary users: sales, marketing, customer service
o Business benefit: sales forecasts, sales strategies, marketing
campaigns
 SCM:
o Primary users: customers, retailers, partners, suppliers, distributors
o Business benefits: market demand, resource and capacity constraints,
real-time scheduling
 ERP:
o Primary users: accounting, finance, logistics, production
o Business benefits: forecasting, planning, purchasing, material
management, warehousing, inventory, distribution
Integration tools:
 Many companies purchase modules from an ERP, SCM, and CRM vendor
separately, so they must integrate the different systems together
o Middleware: several different types of software which sit in the
middle of and provide connectivity between two or more software
applications.
o Enterprise application integration (EAI) middleware: packages
together commonly used functionality which reduced the time
necessary to develop solutions that integrate applications from
multiple vendors.
ERP systems must integrate various organization processes and be:
 Flexible
 Modular and open
 Comprehensive
 Beyond the company
ERP solutions are growing because:
 ERP is a logical solution to the mess of incompatible applications that had
sprung up in most businesses
 ERP addresses the need for global information sharing and reporting
 ERP is used to avoid the pain and expense of fixing legacy systems
Business process:
 Business process improvement will, at a minimum, double gains of a project
by streamlining outdated practices, enhancing efficiency, promoting
compliance and standardization, and making an organization more agile.
 Business process improvement involves three key steps:
o Measure what matters to most customers
o Monitor the performance of key business processes
o Assign accountability for process improvement
The process steps are the activities the customer and store personnel do in order to
complete the transaction
 Business process: a standardized set of activities that accomplish a specific
task, such as processing a customers order.
 Business processes transform a set of inputs into a set of outputs (goods or
services) for another person or process by using people and tools.
Examining business processes:
 Business process characteristics:
The processes have internal and external users
A process is cross-departmental
The processes occur across organizations
The processes are based on how work is done in the organization
Every process should be documented and fully understood by
everyone participating in the process
o Processes should be modeled to promote and complete understanding
Customer facing process: results in a product or service that is received by an
organizations external customer
o Ex. Marketing and sales, product development, service development,
billing, distribution, ect.
Business facing process: invisible to the external customer but essential to
the effective management of the business
o Strategic planning, tactical planning, budgeting, training, purchasing
o
o
o
o
o


Business process improvement:
 Companies are forced to improve their business processes because
customers are demanding better products and services
 Continuous process improvement model: attempts to understand and
measure the current process, and make performance improvements
accordingly
Business process reengineering (BPR) is the analysis and redesign of workflow
within and between enterprises.
 Set project scope -> study competition -> create new processes -> implement
Managerial approach to reengineering projects:
 Define the scope, analyze, evaluate, plan, approve, execute.
Business process design:
 Business process modeling (mapping): the activity of creating a detailed flow
chart or process map of creating a detailed flow chart or process map of a
work process showing it’s inputs, tasks, and activities ina structured
sequence.
 Business process model: a graphic description of a process, showing the
sequence of process tasks, which is developed for a specific scenario
o As-is process model
o To-be process model
o Ex. Burger order process
Selecting a process to reengineer:
 Criteria to determine the importance of the process:
o Is the process broken?
o Is it feasible that reengineering of this process will succeed?
o Does it have a high impact on the agencies strategic direction?
o Does it significantly impact customer satisfaction?
o Is it antiquated?
o Does it fall far below best-in-class?
Business process management (BPM): integrates all of an organizations business
process to make individual processes more efficient
 BPM allows business processes to be executed more efficiently and measures
performance and identifies opportunities for improvement.
 BPM benefits include:
o Update processes in real-time
o Reduce overhead expenses
o Automate key decisions
o Reduce process maintenance cost
o Reduce operating cost
o Improve productivity
o Improve process cycle time
o Improve forecasting
o Improve customer service
BPM tools:
 Business process management tool: an application that designs business
process models and stimulates, optimizes, monitors, and maintains various
processes.
 Crucial success factors:
o Understand reengineering
o Build a business and political case
o Adopt a process management approach
o Measure and track performance continuously
o Practice change management and provide central support
o Manage reengineering projects for results
Disruptive technology:
 Digital Darwinism: implies that organizations which cannot adapt to the new
demands placed on them for surviving in the information age are doomed to
extinct
Disruptive vs. sustaining technology:
 Disruptive technology: a new way of doing things that eventually removes
the market for an older technology
 Sustaining technology: produces an improved product customers are eager
to buy
The internet – business disruption:
 One of the biggest forces changing business is the internet
 Organizations must be able to transform as markets, economic
environments, and technologies change

Focusing on the unexpected allows an organization to capitalize on the
opportunity for new business growth from a disruptive technology
Evolution of the Internet:
 The internet began as an emergency military communications system
operated by the department of defense
 Gradually, the internet moved from a military pipeline to a communication
tool for scientists to businesses
o Internet: computer networks that pass information from one to
another using common computer protocols
o Protocol: standards that specify the format of data as well as the rules
to be followed during transmission
o World wide web (WWW): a global hypertext system that uses the
internet as it’s transport mechanism
o Hypertext transport protocol (HTTP): the internet standard that
supports the exchange of information on the WWW
Reasons for growth of the world wide web:
 Microcomputer revolution made it possible for an average person to own a
computer
 Technological advancements made it inexpensive for PC’s to be connected to
larger networks
 Browser software such as internet explorer provided an easy to use interface
that was attractive
 Email is a very useful and fast tool for people and businesses
 Web pages are easy to create and extremely flexible
 Has a big impact on the quality of information
The internet makes it possible to perform business in ways not previously
imaginable:
It can also cause a digital divide:
 Digital divide: when those with access to technology have great advantages
over those without access to technology
 Web 2.0: a set of economic, social, and technology trends that collectively
form the basis for the next generation of the internet
The Future – Web 3.0
 Semantic web encompasses the following:
o Transforming the web into a database
o An evolutionary path to artificial intelligence
o The realization of semantic web and SOA
o Evolution towards 3D