Chapter 7

e-Business Systems

McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

 Identify these cross-functional enterprise

systems, and give examples of how they
can provide business value to a company
– Resource planning
– Customer Relationship Management
– Supply chain management
– Enterprise application integration
– Transaction processing systems
– Enterprise collaboration systems

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 Learning Objectives

 Give examples of how the Internet and other

information technologies support business
processes within the business functions of
– Accounting
– Finance
– Human resource management
– Marketing
– Production
– Operations management

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 Learning Objectives

 Understand the need for enterprise application

integration to improve the support of business
interactions across multiple e-business
applications

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 Enterprise Business Systems

Using the Internet, other networks,

E-business
and IT to support…

Electronic commerce
Enterprise communications
and collaboration
Web-enabled business processes

E-commerce Buying, selling, and marketing of

products, services, and information
over the Internet and other networks

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 Case 1: NetSuite, Berlin Packaging, Churchill Downs…

 CRM software helps sales and marketing

professionals increase sales revenue by
providing more and better services to
customers and prospects
 CRM implementation
– Often fails due to difficulty of migrating data
– Is easier to do early in a company’s history
 Companies must ensure data are in order
before launching any major CRM initiative

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 Case Study Questions

 What are the business benefits of CRM

implementations for organizations such as
Berlin Packaging and Churchill Downs?
– What other uses of CRM would you
recommend to the latter?
 Do you agree that smaller organizations are
better positioned to be more effective users
of CRM than larger ones?

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 Case Study Questions

 One of the main issues in the case is the

importance of “good” data to the success
of CRM implementations
– In Chapter 5, we compared the file
processing and database management
approaches to data resource management
 Which of the problems discussed there
do you see in this case?
 How do CRM applications attempt to
address them?

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 Cross-Functional Systems

Cross-functional systems cross the

boundaries of traditional business functions

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Enterprise Application Architecture

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 Managing at the Enterprise Level

 Getting the whole business to fly in the

same direction, as efficiently as possible
– Customer relationships
– Back-office operations
– Movement of raw materials & finished goods
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 Customer Relationship Management

 A customer-centric focus
– Customer relationships are a company’s
most valued asset
– Every company should find and retain the
most profitable customers possible
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 What is CRM?

Managing
Managingthe
thefull
fullrange
rangeofofthe
thecustomer
customerrelationship
relationship
involves
involvestwotworelated
relatedobjectives
objectives

(1) Providing customer-facing employees with a

single, complete view of every customer,
at every touch point, across all channels

(2) Providing the customer with a single,

complete view of the company and
its extended channels

CRM uses IT to create a cross functional enterprise system

that integrates and automates customer-serving processes

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Application Clusters in CRM

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 Contact and Account Management

 CRM helps sales, marketing, and service

professionals capture and track relevant
data about
– Every past and planned contact with
prospects and customers
– Other customer business & life-cycle events

 Data are captured through touchpoints

– Telephone, fax, e-mail, Websites
– Retail stores, kiosks, personal contact

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 Sales

 A CRM system provides sales reps

with the tools and data resources
they need to
– Support and manage sales activities
– Optimize cross- and up-selling

 CRM also provides the means to

check on a customer’s account
status and history before scheduling
sales calls

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 Marketing and Fulfillment

CRM systems help with direct marketing

campaigns by automating tasks

Qualifying leads for targeted marketing

Scheduling and tracking mailings

Capturing and managing responses

Analyzing the business value of a campaign

Fulfilling responses & requests

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 Customer Service and Support

 CRM helps customer service managers create,

assign and manage customers’ requests for service
– Call center software
– Help desk software
– Web-based self-service
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 Retention and Loyalty Programs

70% of complaining
The odds of
customers will do
selling to an
business with the
existing customer
company again if it
are 50%; a new
quickly fixes a
one 15%
problem

Boosting
It costs 6 times
An unhappy customer
more to sell to
customer will retention 5%
a new
tell 8-10 others can boost
customer
profits 85%

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 Retention and Loyalty Programs

 Enhancing and optimizing customer retention

and loyalty is a primary objective of CRM
– Identify, reward, and market to the most loyal
and profitable customers
– Evaluate targeted marketing and relationship
programs 7-20
Three Phases of CRM

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Benefits and Challenges of CRM

Benefits of CRM

Identify and target the best customers

Real-time customization and personalization

of products and services
Track when and how a
customer contacts the company

Provide a consistent customer experience

Provide superior service and support

across all customer contact points

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 CRM Failures

 Business benefits of CRM are not guaranteed

– 50% of CRM projects did not produce
promised results
– 20% damaged customer relationships

 Reasons for failure

– Lack of understanding and preparation
– Not solving business process problems first
– No participation on part of involved business
stakeholders

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 What is ERP?

Facilitates
Facilitatesbusiness,
business, Thebackbone
The backboneof
of
supplier,
supplier,and
andcustomer
customer businessprocesses
business processes
information
informationflows
flows

AAcross-functional
cross-functional
enterprise
enterprise system
system

Supportsbasic
Supports basic An
Anintegrated
integrated
internalbusiness
internal business suite
suiteof
ofsoftware
software
processes
processes modules
modules

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ERP Application Components

7-25
 Benefits and Challenges of ERP

ERP Business ERP

Benefits Costs

1. Quality & efficiency 1. High risk & cost

2. Decreased costs 2. Hardware and
software are a
3. Decision support
small part of
4. Enterprise agility overall project
3. Failure can cripple
or kill a business

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Costs of Implementing a New ERP

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 Causes of ERP Failures

Common Causes of ERP Failure

Under-
Failure to
estimating the
involve affected Over-reliance
complexity of
employees in on ERP vendor
planning,
planning and or consultants
development,
development
training

Insufficient data
Insufficient Trying to do too
conversion and
training much, too fast
testing

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 Supply Chain Management (SCM)

 Supply chain management helps a company

– Get the right products
– To the right place
– At the right time
– In the proper quantity
– At an acceptable cost
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 Goals of SCM

Forecast demand Control inventory

Enhance relationships
Receive feedback on
with customers,
the status of every
suppliers, distributors,
link in the supply
and others

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 What is a Supply Chain?

 The interrelationships
– With suppliers, customers, distributors, and
other businesses
– Needed to design, build, and sell a product

 Each supply chain process should add

value to the products or services a
company produces
– Frequently called a value chain

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Supply Chain Life Cycle

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 Electronic Data Interchange

The electronic exchange of business transaction

documents between supply chain trading partners

One of the earliest uses of information technology

for supply chain management
The almost complete automation of an
e-commerce supply chain process
Many transactions occur over the Internet,
using secure virtual private networks

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Typical EDI Activities

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Roles and Activities of SCM in Business

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Planning & Execution Functions of SCM

Planning Supply chain design

Collaborative demand & supply planning

Execution Materials management

Collaborative manufacturing

Collaborative fulfillment

Supply chain event management

Supply chain performance management

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 Benefits and Challenges of SCM

Faster, more
accurate order Reductions in
processing inventory levels

Key Benefits

Strategic
Quicker times
relationships
to market
with supplier
Lower
transaction and
materials cost

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Goals and Objectives of SCM

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 Benefits and Challenges of SCM

 Key Challenges
– Lack of demand planning knowledge, tools,
and guidelines
– Inaccurate data provided by other information
systems
– Lack of collaboration among marketing,
production, and inventory management
– SCM tools are immature, incomplete, and
hard to implement

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 Enterprise Application Integration

 EAI software connects cross-functional systems

 Serves as middleware to provide
– Data conversion
– Communication between systems
– Access to system interfaces
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How EAI Works

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 Transaction Processing Systems

 Cross-functional information systems that

process data resulting from the occurrence
of business transactions
– Transactions include sales, purchases,
deposits, withdrawals, refunds, and payments
– Online transaction processing (OLTP) is a
real-time system that captures transactions
immediately

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Transaction Processing Systems

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The Transaction Processing Cycle

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 Enterprise Collaboration Systems (ECS)

 EC systems are cross-functional information

systems that enhance team and workgroup
– Communication
– Coordination
– Collaboration

 Systems may include

– Networked PC workstations
– Servers
– Databases
– Groupware and application packages
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ECS Tools

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 Functional Business Systems

Various types of information systems that support

the business functions of…

Accounting

Finance

Marketing

Operations management

Human resource management

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 Case 2: OHSU, Sony, Novartis, and Others

 Oregon Health & Science University uses Oracle’s

iRecruitment application, which is part of its
E-Business HR Management System suite
– Managers can request a new employee and process
applications electronically
– Handles most administrative work, including routing
forms and posting jobs on the Web site
– The university fills job openings two weeks faster
and saves $1,500 per job
 More and more HR is being called to be a strategic
business partner, and professionals in this area are
turning to IT for innovative solutions

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 Case Study Questions

 What are some of the business benefits of

the technologies described in the case?
– Provide examples beyond the automation
of transaction-oriented processes
 Do you think the business value of these
strategic HRM applications depends on
the type of business a company is in?
– For instance, consulting, manufacturing,
or professional services?

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 Case Study Questions

 What are some of the challenges and

obstacles in developing and implementing
HRM systems?
– Are these unique to this type of system?
– What strategies would you recommend for
companies to meet those challenges?

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IT in Business

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 Marketing Systems

Marketing systems are concerned with…

Planning,
Planning, Better
Better
promotion,
promotion, Development
Development attracting
attractingand
and
and
andsale
saleofof ofofnew
new serving
serving
existing
existing products
productsand
and present
presentandand
products
productsinin new
newmarkets
markets potential
potential
existing
existing customers
customers
markets
markets

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Marketing Information Systems

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 Interactive Marketing

 Interactive Marketing
– A customer-focused marketing process
– Uses the Internet, intranets, and extranets
– Establishes two-way transactions between
a business and its customers or potential
customers
 Goal
– Profitably use networks to attract and keep
customers
– Get customers to help create, purchase, and
improve products and services
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 Targeted Marketing

Advertising and promotion management

concept with five targeting components
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 Sales Force Automation

 Outfit sales force with notebook computers,

web browsers, and sales contact software
– Connect them to marketing websites and
the company intranet
 Goals
– Increase personal productivity
– Speed up capture and analysis of sales data
– Gain strategic advantage

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 Manufacturing Information Systems

 Supports production/operations functions

– All activities concerned with planning and
control of the processes tied to producing
goods or services
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Computer-Integrated Manufacturing

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 CIM Objectives

 Simplify… production processes, product

designs, and factory organization

 Automate… production processes and the

business functions that support them

 Integrate… all production and support

processes using
– Networks
– Cross-functional business software
– Other information technologies

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 CIM Objectives

CIM supports the concepts of…

Flexible Total quality

Agile
manufacturing management
manufacturing
systems (TQM)

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 Manufacturing Information Systems

 Computers help engineers design products

– Computer-aided engineering (CAE)
– Computer-aided design (CAD)
– Computer-aided manufacturing (CAM)

 Manufacturing also uses software

– Computer-aided process planning
– Material requirements planning (MRP)
– Manufacturing resource planning
– Manufacturing execution systems (MES)
– Process and machine control
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 Human Resource Management (HRM)

 Information systems support

– Planning to meet personnel needs
– Development of employees to their full potential
– Control of all personnel policies and programs
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HRM Systems

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 HRM and the Internet

Recruitment via
the company website Posting messages
& commercial in selected Internet
recruiting services newsgroups

Communicating with
job applicants
via e-mail

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 HRM and Corporate Intranets

Corporate intranet uses

Disseminate
Disseminate
Process
Processcommon
common information
informationfaster
faster
Around-the-clock
Around-the-clock
HRM
HRM than
thanprevious
previous
HRM
HRMservices
services
transactions
transactions company
company
channels
channels

Allow
AllowHRMHRMtaskstasks
Collect
Collect totobe
beperformed
performed
information
informationfrom
from Training
Training
with
withlittle
littleHRM
HRM
employees
employeesonline
online dept.
dept.intervention
intervention

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 Employee Self-Service

Intranet applications can allow employees to

View benefits
Enter travel and expense reports
Verify employment and salary information
Access and update personal information
Enter time-sensitive data
Receive training
Produce automated pay sheets
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 Accounting Information Systems

Oldest and most

widely used Records and reports business
information system transactions and economic events
in business

Produces financial statements

Forecasts future conditions

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Accounting Information Systems

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 Financial Management Systems

 Supports business managers and

professionals making decisions concerning
– Financing of a business
– Allocation and control of financial resources
within a business
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Financial Management Systems

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 Case 3: Perdue Farms and Others

 Even the best companies are challenged by supply

chain pressures during holidays
 The holiday season is difficult for manufacturers
and retailers because they’re making educated
guesses and bets on what demand is going to be
– They’re not going to get it right every time
 Delivering the right number of products to the right
customers at the right time is very important
– Businesses are turning to forecasting and supply
chain management tools

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 Case Study Questions

 What key factors determine the success

or failure of supply chains during the
holiday season?
– Which of these are, or could be, under the
control of companies, and which are
inherent in the end-consumer business?
 Consider the increasing use of gift cards
in lieu of gifts during the holiday season
– What effects does this new practice
introduce into demand planning and supply
chain management? 7-72
 Case Study Questions

 Consider that virtually nothing is known about

the recipients of gift cards
– What strategies can retailers and their suppliers
consider to accommodate these effects?
 Prof. Brian Tomlin says that smart companies
substitute information for inventory
– What do you think he means by this?
– How do you think companies can take advantage
of more extensive and accurate information to
improve their inventory and logistic practices?

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