Chapter 8

Achieving Operational
Excellence and Customer
Intimacy: Enterprise
Applications

8.1 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

STUDENT OBJECTIVES

• Enterprise application
• Demonstrate how enterprise systems achieve
operational excellence by integrating and
coordinating diverse functions and business
processes in the firm.

• Demonstrate how supply chain management

systems coordinate planning, production, and
logistics with suppliers.

8.2 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

STUDENT OBJECTIVES

• Demonstrate how customer relationship

management systems achieve customer intimacy
by integrating all customer information and
making it available throughout the firm.

• Assess the challenges and new opportunities

raised by enterprise applications.

8.3 © 2007 by Prentice Hall

 Enterprise application

• Enterprise systems
• Supply chain management
• CRM

8.4 © 2007 by Prentice Hall

 Why we need enterprise systems

• How does a business manage all the

information needs from different
functional areas
• Serving different managerial
requirements?
• Let’s find out.

8.5 © 2007 by Prentice Hall

 Problems that give rise to ERS
• Run a business based on information from tens
of different databases and systems none of
which speak to each other.
• Company I0 different product lines ,produced in
separate factories, don’t exchange information.
• No business can afford disjointed information
systems that don’t work together to
• produce a coherent picture of the entire
organization.

8.6 © 2007 by Prentice Hall

 What Are enterprise applications

• Business need enterprise systems to

integrate information.
• Enterprise applications easily combine
internal and external information to
present a complete picture of the
business.

8.7 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Enterprise Systems

• What Are Enterprise Systems?

• Based on integrated software modules and a common
central database
• Integrate information from across company’s
divisions, departments, key business processes in
the four functional areas
• Updated information made available to all business
processes
• Generate enterprise-wide data for management
analyses

8.8 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Enterprise Systems

How Enterprise Systems Work

Enterprise systems
feature a set of
integrated software
modules and a
central database that
enables data to be
shared by many
different business
processes and
functional areas
throughout the
enterprise

Figure 8-1
8.9 © 2007 by Prentice Hall
 How enterprise system work
example
• Place order for tire rims

• Verifies customers credit limit

• Schedules the shipment, identifies the best shipping route and
reserves the item from inventory.
• If inventory stocks insufficient to fill order, system orders from
suppliers.
• Sales and production forecast are immediately updated
• General ledger and cash levels are automatically updated
• User could tap into the system to find the status of the order, at any
min.
• Management could obtain info about how business operating
• Generate enterprise wide data for management analyses of product
cost and profitability.

8.10 © 2007 by Prentice Hall

 Enterprise software

– Built around thousands of predefined business

processes that reflect best practices .(Refer to next
slide.)
– Companies map business processes to enterprise
softwares predefined processes for desired functions
– System software can be rewritten in part, but may
degrade performance and process integration
– For maximum benefit company must change its
working to business processes in software.

8.11 © 2007 by Prentice Hall

 Business processes supported by
enterprise systems

– Financial and accounting: General ledger, accounts

payable, cost-center accounting, financial reporting,
etc.
– Human resources: Personnel administration, benefits
accounting, time management, compensation, etc.
– Manufacturing and production: Procurement, inventory
management, purchasing, shipping, quality control,
etc.
– Sales and marketing: Order processing, quotations,
product configuration, billing, credit checking, sales
planning, etc.

8.12 © 2007 by Prentice Hall

 Business Value of Enterprise
Systems
• Increase operational efficiency
• Support decision making and rapid responses to
requests
• Include analytical tools to evaluate overall performance
• Respond rapidly to customer request for information or
products.
• Enforcing standard practices and data throughout
company
• Providing firm-wide information to help managers make
better decisions

8.13 © 2007 by Prentice Hall

 Business Value of Enterprise
Systems
• Allowing senior management to easily find out at
any moment how a particular organizational unit
is performing
• determine which products are most or least
profitable
• For e.g. Coca cola uses enterprise systems to
standardize and coordinate important business
processes in 200 countries.

8.14 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Supply Chain Management Systems

The Supply Chain

• A network of organizations and processes

• for procuring raw materials,
• transforming them into products,
• and distributing the products
• Upstream supply chain: firm’s suppliers, suppliers’
suppliers, processes for managing relationships
with them
• Downstream supply chain: organizations and processes
responsible for delivering products to customers
8.15 © 2007 by Prentice Hall
 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Supply Chain Management Systems

Nike’s Supply Chain Figure 8-2

This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and
downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a
simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers(tier1) and
sneaker soles(tier2),supplier to these suppliers(tier3).

8.16 © 2007 by Prentice Hall

 Supply Chain Management Systems

• Automate the flow of information among

members of the supply chain
• Help make better decisions about when
and how much to purchase ,produce or
ship.

8.17 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Supply Chain Management Systems

Business Value of Supply Chain Management Systems

• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
• Reduced supply chain costs lead to increased
profitability
• Increased sales
8.18 © 2007 by Prentice Hall
 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Customer Relationship Management Systems

What Is Customer Relationship Management?

Capture, consolidate, analyze customer data and distribute

results to various systems and customer touch points
(contact points) across enterprise

Provide single enterprise view of customers

Provide analytical tools for determining value, loyalty,

profitability of customers

Assist in acquiring new customers, providing better service and

support to customers, customize offerings to customer
preferences, provide ongoing value to retain profitable
customers
8.19 © 2007 by Prentice Hall
 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Customer Relationship Management Systems

Customer Relationship Management (CRM)

CRM systems examine customers from a multifaceted perspective. These

systems use a set of integrated applications to address all aspects of the
customer relationship, including customer service, sales, and marketing.
8.20 © 2007 by Prentice Hall
 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Customer Relationship Management Systems

CRM Software

• CRM packages are available with a wide spectrum

of functions

• Typically include tools for sales, customer service, and

marketing

8.21 © 2007 by Prentice Hall

 Essentials of Business Information Systems
Chapter 8 Achieving Operational Excellence and Customer
Intimacy: Enterprise Applications

Customer Relationship Management Systems

Business Value of Customer Relationship Management

• Business benefits:
• Increased customer satisfaction
• Reduced direct-marketing costs
• More effective marketing
• Lower costs for customer acquisition/retention
• Increased sales revenue
• By identifying profitable customers and segments for focused
marketing and cross-selling
• Reduced churn rate (number of customers who stop using or
purchasing products or services)

8.22 © 2007 by Prentice Hall

 Challenges posed by enterprise
application
• Enterprise systems are difficult to
implement.
• Require extensive organizational change
• Large new software investment
• If implemented atop flawed processes
they cant provide value.
• Employees require proper training

8.23 © 2007 by Prentice Hall

 EXAMPLES OF enterprise
application
• SAP business suite BASED ON SERVICE
ORIENTED ARCHITECTURE)
• Oracle e business suite
• Microsoft dynamics suite

8.24 © 2007 by Prentice Hall