Enterprise Applications and Business Communication
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1 Enterprise Applications and Business Communication Topics Covered BDIS Section 8.2 Customer Relationship Management and Enterprise Resource Planning Customer Relationship Management (CRM) Enterprise Resource Planning (ERP) BSAD 141 Dave Novak What is integration and why is it important? Integration bringing together or combining different systems, data, and processes to operate as a single seamless whole system As opposed to separate, divided standalone systems, data, and processes that are not integrated with one another Fact organizations have many different processes, use many different software applications, and collect and use many different types of data Should these things be integrated in some way or should they operate in isolation? If you re working on a project should the members of the group meet and communicate, or should each group member separately interpret what should be done and then do their work in isolation? Software applications - end-user software or programs designed specifically to help the user perform a specific task MS Word, MS Excel, MS Access, Safari, Chrome, Gmail, Hotmail, MS Outlook essentially all database, word processing, spreadsheet, gaming, etc. software Different applications do not necessarily communicate with one another Platform specific software Data - different types of data are stored in different locations Order entry data, Customer support data, Manufacturing specification and quality control data, Billing data, data associated with interactions from different suppliers Organizations tend to collect and use different data associated with specific processes or functions May not be able to merge the data Data may be stored on different platforms 1
2 To function properly, different functional areas, different processes, and different information systems should be aware of the big picture of what is happening Communicate and work together (i.e. integrate) Organizations may patch together or enable some type of communication between existing systems using middle ware Why not buy a brand spanking new Enterprise System like PeopleSoft or SAP? esoft-enterprise/overview/index.html It is very expensive, time consuming, and disruptive to reengineer processes and switch software platforms Compare PeopleSoft and SAP Forward integration - moving information automatically through the organization from backend order entry systems to all downstream systems and processes Downstream or forward integration toward customer or destination Backward integration - sends information entered into a given system automatically to all upstream systems and processes Upstream or backward integration toward supplier or origin Logical ordering or sequence of processes in organization 2
3 Forward / downstream Customer placed an order our group verifies data (payment, name, address, item#, and quantities ordered) and enters the order info into system We want to know that billing is: aware of this information, coordinates their billing information with our order information Backward / upstream Billing wants to make sure that all billing info (payment, name, address, item#, and quantities ordered) is consistent with the original information entered at the time of the order Do all organizations have a supply chain? Even small consulting firms operate in a manner that follows many supply chain principles They have clients or customers (those clients may also have clients) downstream They have peer organizations and subject matter experts (or suppliers) that they partner with upstream As an entrepreneur How do you start a business? How do you grow a business? How do you stay in business? If your business relies on technologies, products, or services provided by other people or organizations, how do you manage your interactions with those people and organizations? If your business has customers or clients, how do you manage your interactions with those organizations and people? Why does SCM matter? If you manage a local grocery store (say City Market) How do you get the products from the different manufacturers to stock your shelves? What prices to you pay for those products and how much is the markup to your customers? How do you handle perishable products? When to you restock? How much do you order? How often do you reorder? When and how often do delivery trucks come? 3
4 Apply concepts of application, data, upstream and downstream integration to your interactions with other organizations in your supply chain What if the ordering software that you use is incompatible with the order processing software that Klinger s Bakery uses? Scale this incompatibility up City Market s interactions with Klinger s (and vice versa) have implications for both organizations All Klinger s products at CM are old and stale CM customers can t purchase Klinger s products Why doesn t City Market buy Klinger s? Why doesn t Klinger s buy City Market? Information technology and information systems can help with visibility and integration within a supply chain Competitive advantage!! Profitability Price advantage? Service advantage? Section 8.2 Customer Relationship Management and Enterprise Resource Planning CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM) Involves managing all aspects of a customer s relationship with an organization to increase customer loyalty and retention and an organization's profitability CUSTOMER RELATIONSHIP MANAGEMENT Charles Schwab recouped cost of multimilliondollar CRM system in less than 2 years System allowed Schwab to segment its customers into serious and nonserious investors CRM system looked for customers that had automatic withdrawal from a bank account as a sign of a serious investor CRM system looked for stagnant balances as a sign of a nonserious investor Focus efforts on selling to serious investors, and spend less time attempting to sell to nonserious investors 4
5 THE BENEFITS OF CRM Organizations can find their most valuable customers through RFM - Recency, Frequency, and Monetary value How recently a customer purchased items How frequently a customer purchased items The monetary value of each customer purchase THE BENEFITS OF CRM Once an organization knows this information, it can begin to strategize marketing campaigns, sales promotions, and other ways to increase business For example: if Sally purchases a high $ volume of products, but only at the height of the season, then the company should send her a special offer during the offseason The Power of The Customer The customer is always right and now has more power than ever thanks to the Internet How would you complain? What would the effect be? CRM Communication Channels Text message Instant message Voice mail Voice call letter Web order Phone order Meeting Customer service call Twitter Facebook CRM Communication Channels Integration example Each communication channel may be stored in a different database If customer calls with a question or complaint, does that show up in the contact DB? Measuring CRM Success Using CRM metrics to track and monitor performance is a best practice Common CRM metrics a manager can use to track the success of the system Only track between five and seven of the hundreds of CRM metrics available A CRM system should integrate all of this communication 5
6 Evolution of CRM CRM reporting technology Help organizations identify their customers across other applications CRM analysis technologies Help organization segment their customers into categories such as best and worst customers CRM predicting technologies Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving Evolution of CRM Business world increasingly shifting from product-focus to customer-focus Treating existing customers well is the best source of profitable and sustainable revenue growth In the age of e-business, it is more challenging than ever before to truly satisfy your customers Evolution of CRM Evolution of CRM If you are running your own business or managing a group or functional area, how do you identify your most important customers or clients? If you and your group has limited time, how much time and money should you devote to the different categories of your customers? Operational and Analytical CRM Operational CRM Supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers Customer service, sales, billing Operational and Analytical CRM Analytical CRM Supports backoffice operations and strategic analysis and includes all systems that do not deal directly with the customers Accounting, finance, human resources, data warehouses 6
7 Operational and Analytical CRM Operational CRM Marketing CRM technology List generator, campaign management, cross-selling and up-selling Sales CRM technology Sales management, contact management, opportunity management Customer service CRM technology Contact center, Web-based self-service, call scripting Analytical CRM Website personalization website stores enough data about a person s likes and dislikes to fashion offers more likely to appeal to that person Analytical CRM relies heavily on data warehousing technologies and business intelligence for insights into customer behavior These systems quickly aggregate, analyze, and disseminate customer information throughout an organization Extending CRM Current trends include Supplier relationship management (SRM) Partner relationship management (PRM) Employee relationship management (ERM) Extending CRM Supplier relationship management (SRM) focuses on keeping suppliers satisfied by evaluating and categorizing suppliers Partner relationship management (PRM) focuses on keeping vendors satisfied by managing partner and reseller relationships Employee relationship management (ERM) provides employees with a subset of CRM applications available through a Web browser Enterprise resource planning Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) Make enterprisewide decisions by viewing enterprisewide information on all business operations 7
8 ERP systems collect data from across an organization and aggregate the data generating an enterprisewide view Most organizations operate functional silos where each department has its own systems A organization might purchase an ERP and then all of the functional silos would be on one system, however, this doesn t happen very often in the real world Most organizations require anywhere from 10 to 1,000 different systems to run their business Finding one system that could meet all needs of an entire organization from billing to sales is almost impossible An organization can purchase an ERP and still have other applications running parts of its business (for example, taxation packages) that are not supported, or not supported well, by the ERP system ERP Systems integrate and automate business processes The Organization Before ERP ERP Bringing The Organization Together 8
9 THE BENEFITS OF ERP THE BENEFITS OF ERP What are core ERP components? What are core ERP components? Three most common core ERP components i.e., modules in PeopleSoft system 1. Accounting and finance 2. Production and materials management 3. Human resource Accounting and finance manage accounting data and financial processes within the enterprise (i.e., general ledger, accounts payable, accounts receivable, budgeting, and asset management) Production and materials management production planning and execution (i.e., demand forecasting, production scheduling, job cost accounting, and quality control) What are core ERP components? Human resource track employee information including payroll, benefits, compensation, performance assessment, as well as tracking compliance with the legal requirements of multiple jurisdictions and tax authorities Measuring ERP Success Balanced scorecard Enables organizations to clarify their vision and strategy and translate them into action Balanced scorecard views the organization from four perspectives 1. Learning and growth 2. Internal business process 3. Customer 4. Financial 9
10 Balanced Scorecard Measuring ERP Success What: a management system, (in addition to a measurement system), that enables organizations to clarify their vision and strategy and translate them into action How: provides feedback about both internal business processes and external outcomes to continuously assess and improve strategic performance and results Focused on four perspectives where organization develops metrics, collects and analyzes in context of each perspectives Measuring ERP Success Why not? ERP systems contain multiple complex components that are not only expensive to purchase, but also expensive to implement and maintain Costs include Software Consulting fees Process rework Customization Integration Testing/Training Measuring ERP Success ERPs are one of the most difficult systems to implement and measure ERP Implementation failures: No clear strategy A good plan or just a plan? Part-time project management Under-estimating resources required Over-reliance on the consultants Customization On the job training Insufficient testing Not enough user training ORGANIZATIONAL INTEGRATION WITH ERP SCM, CRM, and ERP form backbone of ebusiness Integration of these applications is the key to success for many organizations Integration (theoretically) allows the unlocking of information to make it available to any user, anywhere, anytime ORGANIZATIONAL INTEGRATION WITH ERP The SCM and CRM modules in ERP software such as SAP and PeopleSoft are typically not as functional or flexible as the specialized software made by industry leaders SCM Siebel, Cin7, Cleo, Intelex, etc. CRM i2, HubSpot CRM, Pipedrive, Freshsales, etc. 10
11 ORGANIZATIONAL INTEGRATION WITH ERP Grocery store analogy Store brand products versus name brand products ORGANIZATIONAL INTEGRATION WITH ERP Summary Focus on Customer Relationship Management (CRM) and Enterprise Resource Management (ERP) 11
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