McGraw-Hill/Irwin

7-1 Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
 Chapter
7
Electronic Business Systems

Cross-functional Enterprise Systems

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives
1. Identify the following cross-functional enterprise
systems, and give examples of how they can
provide significant business value to a company:
a. Enterprise resource planning
b. Customer relationship management
c. Supply chain management
d. Enterprise application integration
e. Transaction processing systems
f. Enterprise collaboration systems

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 Learning Objectives
2. Give examples of how Internet and other
information technologies support business
processes within the business functions of
accounting, finance, human resource management,
marketing, and production and operations
management.
3. Understand the need for enterprise application
integration to improve support of business
interactions across multiple e-business applications.

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 Case 1: Hilton Hotels Corporation
Data-Driven Hospitality
 OnQ the IT piece of a “customers really matter”
strategy
 Goal to
 Buildcustomer loyalty
 More revenue per visit
 Customer profiles

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 Case Study Questions
1. What are the benefits and drawbacks of the OnQ
system at Hilton?
2. What does Hilton have to do to create a competitive
advantage through OnQ? Provide some specific
examples.
3. Is it possible to have too much information about a
customer? Explain.

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 Real World Internet Activity
1. The concept of customer relationship management
is rooted in the idea that more information about a
customer will ultimately result in better service to
the customer. Using the Internet,
 See if you can find examples of other companies that
have found ways in which to apply the gathering of
customer data to the management of customer
relationships?

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 Real World Group Activity
 CRM raises issues of invasion of privacy since
conclusions can be drawn about a customer’s
behavior from the data commonly collected. In small
groups,
 Discuss these potential privacy issues.
 How can an organization meet the needs of serving its
customers while simultaneously protecting their
privacy?

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 Cross-functional Systems
 Cross the boundaries of traditional business
functions
 In order to reengineer and improve vital business
processes all across the enterprise

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 Enterprise Application Architecture

Source: Adapted from Mohan Sawhney and Jeff Zabin, Seven Steps to Nirvana: Strategic
Insights into e-Business Transformation (New York: McGraw-Hill,2001), p. 175.
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 Customer Relationship Management
(CRM)
 CRM uses technology to
 Create a cross-functional enterprise system
 That integrates and automates many of the processes in
sales, marketing and customer service that interact with
customers
 Create a framework of web-enabled software and
databases that integrate these processes with the rest of
the company’s processes

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 CRM Applications Clusters

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 CRM applications
 Contract and Account Management
 Helps sales, marketing and service professionals
 Capture and track data about past and planned
contacts with customers and prospects
 Sales
 Provides sales reps with software tools and data they
need to support and manage sales activities
 Cross-selling is trying to sell a customer of one product
with a related product
 Up-selling is trying to sell customer a better product
than they are currently seeking
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 CRM applications
 Marketing and Fulfillment
 Help marketing professionals accomplish direct
marketing campaigns by tasks such as
 Qualifying leads for targeted marketing and scheduling
and tracking direct marketing mailings

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 CRM applications
 Customer Service and Support
 Provides sales reps with software tools and database
access to customer database shared by sales and
marketing professions
 Helps create, assign and manage requests for service
 Call center software routes calls to customer support
agents based upon their skills and type of call
 Help desk software provides relevant service data and
suggestions for resolving problems for customer
service reps helping customers with problems

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 CRM applications
 Retention and Loyalty Programs
 Try to help a company identify, reward, and market to
their most loyal and profitable customers
 Data mining tools and analytical software
 Customer data warehouse

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 CRM supports customer life cycle

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 CRM benefits
 Identify and target best customers
 Real-time customization and personalization of
products and services
 Track when a customer contacts a company
 Provide consistent customer experience and superior
service and support

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 Reasons for CRM failures
 Lack of understanding and preparation
 Rely on application to solve a problem without first
changing the business processes
 Business stakeholders not participating and not
prepared

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 Enterprise Resource Planning (ERP)
 Cross-functional enterprise system
 with an integrated suite of software modules
 that support the basic internal business processes of a
company

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 ERP application components

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 Business benefits of ERP
 Quality and efficiency
 Decreased costs
 Decision support
 Enterprise agility

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 Costs of implementing a new ERP

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 Causes of ERP failure
 Underestimating the complexity of planning,
development and training
 Failure to involve affected employees in planning
and development
 Trying to do too much too fast
 Insufficient training in new work tasks
 Failure to do enough data conversion and testing
 Over reliance on ERP vendor or consulting
companies

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 Supply Chain Management (SCM)
A cross-functional interenterprise system
 To help support and manage the links between a
company’s key business processes
 And those of its suppliers, customers and business
partners

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 SCM goal
 Fast,efficient, low-cost network of business
relationships or supply chain to get a company’s
products from concept to market

A supply chain:
 Interrelationships with suppliers, customers,
distributors, and other businesses that are needed to
design, build and sell a product

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 SCM

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 Electronic Data Interchange (EDI)
 EDI:
 The electronic exchange of business transactions
 Over the Internet and other networks
 Between supply chain trading partners

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 EDI Examples

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 Role of SCM

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 Goals and Objectives of SCM

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 Causes of problems in SCM
 Lack of proper demand-planning knowledge, tools
and guidelines
 Inaccurate or overoptimistic demand forecasts
 Inaccurate production, inventory, and other data
 Lack of adequate collaboration within the company
and between partners
 SCM software considered immature, incomplete and
hard to implement

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 Enterprise Application Integration (EAI)
 EAI 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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 Enterprise Collaboration Systems (ECS)
 ECS
 Cross-functional
IS that enhance communication,
coordination and collaboration among the members of
business teams and workgroups

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 ECS Goals
 Communicate: share information with each other
 Coordinate: coordinate individual work efforts and
use of resources with each other
 Collaborate: work together cooperatively on joint
projects and assignments

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 ECS Tools

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 Case 2: The Business Case for EAI
 EAI involves using software to connect a variety of
applications into a cohesive unit
 Helps enterprises align systems more closely with
business processes
 Expect to spend $200,000 - $400,000 on an EAI project
 EAI is costly and complex
 Technical staff need lots of training

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 Case Study Questions
1. Why has EAI recently “become a critical part of the
IT strategy at many organizations,” and a high-
ranking project of top IT executives? Use Baxter
International, GE Power and Corporate Express as
examples.
2. What is the major difference in the business value
of the EAI projects at Baxter International, GE
Power and Corporate Express?
3. What are some of the challenges in developing and
implementing EAI systems? How can companies
meet this challenge?
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 Real World Internet Activity
1. Integrating applications at the enterprise level,
while desirable, is often associated with many
significant challenges to the organization. Using
the Internet,
 See if you can find examples of other companies that
have found ways to meet these challenges and
successfully integrate their applications on an
enterprise level.
 Are there companies that specialize in assisting such
integration projects?

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 Real World Group Activity
2. One of the challenges associated with application
integration on an enterprise level is determining
which applications to integrate and which to leave
as is. In small groups,
 Discuss how an organization should approach an
integration project.
 What criteria should be used in determining a
candidate application for enterprise integration?

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 Functional Business Systems
A variety of information systems (transaction
processing, management information systems,
decision support, etc.)
 That support the business functions of
 Accounting,finance, marketing, operations
management and human resource management

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 Examples of functional information
systems

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 Marketing Information Systems

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 Interactive marketing
 Interactive marketing:
A customer-focused marketing process
 Using the Internet, intranets, and extranets
 To establish two-transactions
 Between a company and its customers or potential
customers
 Goal:
 to profitably attract and keep customers
 who will become partners with the business
 in creating, purchasing and improving products and
services
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 Targeted Marketing
 An advertising and promotion management concept
that includes five targeting components

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 Targeted Marketing Components
 Community – customize advertising to appeal to
people of specific virtual communities
 Content – advertising placed on a variety of selected
websites aimed at a specific audience
 Context – advertising placed on web pages that are
relevant to the content of a product or service
 Demographic/Psychographic – web marketing
efforts aimed at specific types or classes or people
 Online Behavior – promotion efforts tailored to each
visit to a site by an individual, e.g., using cookies files

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 Sales Force Automation
 Outfit sales force with notebook computers, web
browsers and sales contract management software
 Connect them to marketing websites and company
intranet
 Goal:
 Increase personal productivity
 Speeds up capture and analysis of sales data from the
field to marketing managers
 Gain strategic advantage

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 Manufacturing Information Systems
 Support the production/operations function
 Includes all activities concerned with planning and
control of 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 as a vital foundation to
automation and integration
 Automate production processes and the business
functions that support them with computers,
machines, and robots
 Integrate all production and support processes using
computer networks, cross-functional business
software, and other information technologies

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 CIM Systems
 Computer-aided manufacturing (CAM) - automate
the production process
 Manufacturing execution systems (MES) –
performance monitoring information systems for
factory floor operations
 Process Control – control ongoing physical processes
 Machine Control – controls the actions of machines

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 Human Resource Management (HRM)
 Information systems designed to support
 Planning to meet the personnel needs of the business
 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
 Recruitingemployees using the corporate website
and commercial recruiting services
 Posting messages in selected Internet newsgroups
 Communicating with job applicants via e-mail

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 HRM and Corporate Intranets
 Process common HRM applications
 Allow HRM department to provide around-the-clock
services
 Disseminate valuable information faster than
through previous company channels
 Collect information from employees online
 Allow managers and other employees to perform
HRM tasks with little intervention by the HRM
department
 Training tool
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 Employee Self-Service (ESS)
 Intranet applications that allow employees to
 View benefits
 Enter travel and expense reports
 Verify employment and salary information
 Update their personal information
 Enter data that has a time constraint to it

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 Accounting Information Systems
 Record and report the flow of funds through an
organization
 Produce financial statements
 Forecasts of future conditions

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 Accounting Information Systems

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 Six essential Accounting Information
Systems
 Order Processing – Captures and processes customer
orders and produces data for inventory control and
accounts receivable
 Inventory Control – Processes data reflecting changes
in inventory and provides shipping and reorder
information
 Accounts Receivable – Records amounts owed by
customers and produces customer invoices, monthly
customer statements, and credit management reports

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 Six essential Accounting Information
Systems
 Accounts Payable – Records purchases from,
amounts owed to, and payments to suppliers, and
produces cash management reports
 Payroll – Records employee work and compensation
data and produces paychecks and other payroll
documents and reports
 General Ledger – Consolidates data from other
accounting systems and produces the periodic
financial statements and reports of the business

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 Financial Management Systems
 Supportbusiness managers and professionals in
decisions concerning
 The financing of a business
 The allocation and control of financial resources within
a business

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 Financial Management System Examples

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 Case 3: Improving Supply-Chain Results
 Supply chains are a kludge of systems including
 Internally: manufacturing, warehousing, inventory
control, planning, shipping, and logistics
 Relationships with suppliers and partners
 Increasing dependence on the input of customers
 Companies are replacing this kludge with state-of-
the-art software
 Two major software types:
 Supply-chain execution
 Supply-chain planning

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 Case Study Questions
1. What is the business value of SCM systems for
Brunswick and Whirlpool?
2. Does the business value of SCM depend upon what
type of business a company is in? Explain.
3. How does Brunswick’s approach to SCM differ
from that of Whirlpool’s? Is one approach superior
to all others? Why or why not?

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 Real World Internet Activity
1. Supply chain management involves more than
simply automating and networking all of the
participants and stakeholders. Often the first step
is to rationalize the various steps in the supply
chain to determine their necessity. Using the
Internet,
 See if you can find examples of other companies that
have reengineered their supply chains by first looking
at the current method and changing its steps before
automating and networking the partners.

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 Real World Group Activity
 When supply chain relationships are reviewed for streamlining,
longtime supply chain partners may no longer be viable. Then
the organization must decide between:
 preserving a longstanding relationship with a supply chain
partner and sacrificing the benefits of a more rational
process,
 or terminating a longtime relationship in favor of a more
beneficial supply chain.
 In small groups,
 Discuss the pros and cons of this decision.
 What criteria should an organization use in determining the
appropriate action with regard to longstanding supply chain
partners?

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