ERP and CRM in Business
Order Instructions
Respond to the discussion question using the lessons and vocabulary found in the reading. Support your answers with examples and research, and cite your research using the correct APA format.
ERP and CRM in Business
Mostlarge businesses rely on many complex processes to keep them running smoothly. Two large areas that impact large areas of business and IT are ERP and CRM.
Respond to the following questions:
How do ERP and CRM help a company?
What are the drawbacks to setting up those different types of systems in a business?
What direct effects do these systems have on customers?
E-mail: Supports document sharing and person-to-person messaging. Businesses treat this facility as an essential collaboration and communication tool. Users utilize e-mail to share documents, graphic images, information, and ideas.
File Transfer Protocol (FTP): Is a tool for retrieving or transferring files from a remote computer.
Instant Messaging and Chatting: Allows live, interactive conversations between multiple people over the Internet. Chat systems include video and voice functionality.
Internet Telephony: Uses Voice over Internet Protocol (VoIP) to deliver voice service in digital form using Internet Protocol (IP) packet switching. Internet telephony avoids the tolls that circuit-switched telephone networks charge.
Telnet: Is a protocol that establishes a rapid link between two computers allowing a user to log on to one computer while performing work on another computer.
Usenet Newsgroups: Are forums in which people share ideas and information on a specific topic via electronic bulletin boards where anyone can post messages on the topic for others to see and respond.
Virtual Private Network (VPN): Is a secure connection between two points across a public network to transmit corporate data. VPN provides a low-cost alternative for conducting communication without purchasing or leasing a private WAN.
World Wide Web (WWW): Enables individuals to link to information resources located on different computers systems around the globe. This is achieved by providing a universal set of standards for storing, retrieving, and displaying information in a client/server browser environment. Browsers use the ability of hypertext to surf and navigate on the web. Web home pages are created for new products and services to build closer relationships with customers.
Browser: Uses a URL to access a Web site. Search engines, Web site directories, and the push technology can help find the URLs required to identify Web sites that may contain the requested information.
Shopping bot: Helps e-commerce buyers or shoppers locate or evaluate services and products they may wish to purchase. For example, the Product Search Web site of the Google search engine looks for the lowest prices of products for sale on the Internet.
Push technology: Obtains relevant information from networks by configuring a computer to broadcast information directly to users based on their specific interests. An example of this is the automatic updating of business manuals.
Internet and web technology standards: Allows the interfaces and connectivity for private Extranets and internal private intranets that are used for collaborating with other companies for training, development, product design, and SCM. Private industrial networks are built on Extranets.
nternet-enabled PDAs, cell phones, and other wireless computing devices are examples of the mobile computing technology, where users can access digital information on the web from any location.
WiFi represents the nomadic computing technology where users can obtain wireless web information if they are in the range of a wireless Hot Spot. This technology allows users to make instant decisions without being tethered to a desk or a computer. For example, GE’s transportation systems utilize eServices, which is a WiFi technology to maintain locomotives wirelessly by running diagnostic programs. These programs determine what parts are required to fix the locomotive engine and order the required parts from an untethered Tuff Book or iPAQ PDA. This is an example of field force automation (FFA), which automates tasks and delivers content to employees who are visiting customers.
The two principal standards for accessing the Internet from wireless mobile devices are:
I-Mode: Enables cell phones to receive web-based information and services developed by Japan’s NTT DoCoMo mobile phone network.
Wireless Application Protocol (WAP): Allows cell phones and other wireless devices with tiny screens, low-memory constraints, and low-bandwidth connections to access web-based content and services. WAP uses wireless markup language (WML), which is optimized for tiny displays and is based on XML. A user with a WAP-compliant phone uses the built-in Microbrowser to make a request in WML. A Microbrowser is web browser software with a small file size that can work with the low bandwidth of wireless networks on the tiny displays of handheld devices with minimal memory.
Connectivity of application integration
Control of hidden costs
Difficulty of ensuring network scalability, reliability, and security
Loss of management control
Careful management of organizational change
Some management solutions to these problems include:
Asserting data administration disciplines
Considering application integration, bandwidth, cost controls, and connectivity when planning the IT infrastructure
Increasing end-user training
Managing and planning digital integration of the business and the organizational changes associated with Internet computing
Application software is the basic building block of the computer system of an enterprise. An application software package consists of software programs that commercial vendors such as SAP, Oracle, Microsoft, Siebel, and Peoplesoft lease or sell. This software eliminates the need for custom-written, in-house software.
An integrated software package such as Microsoft Office combines multiple applications like word processing, Excel spreadsheets, and PowerPoint presentations. These provide easy transfer of data and images between applications.
Enterprise application integration (EAI) software can connect different applications that support sales & marketing, manufacturing & production, finance & accounting, and human resources into one graphical user interface (GUI). This enterprise software integrates data that multiple functions and business processes will use so that information can flow seamlessly throughout the firm, improving decision making, collaboration, efficiency, and coordination.
An enterprise system is based on a common central database and a suite of integrated software modules. The database feeds the data and collects the data from numerous applications that can support nearly all the business activities of a firm.
Application software functions only if business processes are integrated appropriately. So now let us understand how several business processes are integrated in an organization.
Existing business processes
Predefined business processes within the software
Functionality of the new system they wish to utilize
Mapping their business processes to the predefined business processes within the new application system software
Limited customizations and configurations that allow minor changes to the predefined business processes within the new application system software
Leading software vendors such as SAP, Oracle, and Siebel have developed solution maps or process maps. The maps refer to how their application software supports specific industries based on best practices and business process knowledge gained from other successful system implementations of their applications. Best practices are the most successful problem-solving methods or solutions for effectively and consistently achieving a business objective.
On the subsequent pages we will discuss the SCM enterprise application, which maintains and improves the supply chain processes of a digital enterprise. This helps the enterprise to meet the delivery schedules of products or services.
Business process integration is performed when a process enters new data and the resulting information is immediately available to other integrated business processes. When an organization decides to implement an enterprise system, they should consider: Businesses implementing enterprise systems have to adopt the business processes embedded in the software and sometimes change their existing business processes to conform to the processes built into the software.
Plan: Balances aggregate supply and demand to develop a course of action to meet sourcing, production, and delivery needs.
Source: Procures the services and goods required to create a specific service or product.
Make: Transforms a product into a finished state to meet actual or planned demand.
Deliver: Provides services and finished goods to meet actual or planned demand, including transportation, order, and distribution management.
Return: Receives returned products and includes post delivery customer support.
Logistics is the control and planning of all factors that will impact the transportation of a service or a product.
Just-in-time (JIT) systems minimize inventory by having components arrive exactly at the moment they are needed and finished goods shipped as soon as they leave the assembly line.
SCM systems automate the flow of information among members of supply chains to make better decisions about how much and when to buy, produce, or ship. When information about demand for a product is distorted as it passes from retailer to distributor to manufacturer to supplier, it creates a building ripple effect across the supply chain called a bullwhip effect. Accurate information from SCM systems can reduce the uncertainty and the impact of the bullwhip effect. SCM systems provide data such as inventory turns, fill rates, and the make/source cycle time for evaluating the performance of supply chain processes. Companies can utilize Extranets to coordinate the supply chain processes shared with their business partners and use intranets to improve coordination among their internal supply chain processes. SCM can help cash utilization by delivering the product sooner to customers and thus receiving payments sooner. It can also reduce the cost of moving a product through the supply chain and improve responsiveness and customer service.
A major challenge of SCM automation is that it extends beyond the walls of the organization and is complex. Suppliers need not guess how much raw material to procure. Manufacturers need not order more than what they require from suppliers to satisfy customer demand. Retailers have smaller quantities of leftover merchandise and empty shelves if they share information about sales patterns and sales with manufacturers.
SCM software includes software for:
Supply Chain Execution: Manages the flow of products through the final stages of production, distribution, and delivery.
Supply Chain Planning: Enables the organization to develop sourcing, manufacturing, and distribution plans and generate forecasts for a product.
ERP systems support organizations in their business plans while solving real business issues. The decision to implement an ERP system within an organization is justified with a return on investment (ROI) analysis. Some of the best areas for ROI in ERP implementations are providing better job order quotes and reducing inventory costs. The ability to meet deadlines is critical for keeping customers satisfied while avoiding excessive shipping costs. Several questions arise when we determine ROI. They are:
Are we making business decisions manually without the benefits of the current software?
Is paper the usual means we use to transfer information between departments?
Are we losing market share because we spend more time fighting fires than satisfying customers?
Do we fail to ship most products on time or to the correct place with errors at normal surface shipping rates?
If the answer to these questions is yes then you probably need to invest in ERP software. New ERP software means new procedures and processes. Start with streamlining procedures. Team building is another important step. Make sure that the separate departments are working towards a common goal and not to the detriment of other departments.
The four broad types of incremental returns for businesses from their ERP investment are:
Money returns
Time returns
Knowledge returns
Brand returns
ERP systems support the following business processes:
Marketing & Sales
Production & Manufacturing
Human Resources
Accounting & Finance
Each business is different and may have an opportunity to improve their:
Sales lead development
Product development process
Purchase cost reduction
Capital utilization
Capacity utilization
Productivity
Business capability: The entire organization can more efficiently respond to customer requests for products or information, forecast new products, and deliver them timely. This can be done by integrating discrete business processes in sales, logistics, production, and finance.
Firm structure: An enterprise-enabled organization does business in the same way worldwide, with functional boundaries de-emphasized in favor of cross-functional coordination and information flowing freely across business functions.
Management process: Information supplied by an enterprise is structured around cross-functional business processes and it can be rapidly assembled for monitoring operational activities and measuring performance.
Technology platform: Enterprise systems create an integrated repository that gathers data about all key business processes.
ERP System Challenges
ERP systems pose multiple challenges:
Daunting implementation process: Organizations implementing ERP systems need to develop firm-wide definitions of data, retrain workers, redesign their fundamental business processes, and simultaneously carry on business as usual. Employees will have to learn how to perform a new set of processes and understand how the information they enter into the system can affect other parts of the company.
Inflexibility: ERP software tends to be complex and difficult to master and there is a worldwide shortage of people with the expertise to install and maintain it. It is difficult to make a change in only one part of the business without affecting other parts as well.
Realizing strategic value: If an ERP system is not compatible with the way a company does business, the company may choose a better way of performing a key business process that might be related to its competitive advantage. ERP systems promote centralized organizational coordination and decision making.
High up-front costs and future benefits: It might take a large company three to five years to fully implement all the technological and organizational changes that an ERP system needs. The total implementation cost might amount to five or six times the purchase price of the software. The benefits often can’t be precisely quantified at the beginning of the ERP project and accrue from employees using the system after its completion.
CRM is a business strategy supported by software. Software vendors provide CRM systems. The vendors either support sales force automation (SFA), e-commerce, marketing automation, data mining, Web-based personalization, OLAP, contact management, customer support, campaign management, data warehousing, or geographical information systems (GIS). These systems can facilitate CRM but none of them is a CRM by itself.
Organizations implement CRM generally to move from being product-centric to customer-centric, to use IT tools to improve business, and to make integrated customer-contact information available to all customer-contact personnel. Companies have been spending an average of $9 million annually on CRM initiatives. The advent of the Internet has significantly increased customer expectations.
The key to CRM is to:
Identify how the customers want you to relate with them, adapt your organization to support the goals, and then apply the right technology that supports the efforts.
Identify the process gaps and conduct a process gap analysis for each functional area.
Break down process gaps to identify the detailed process steps that contribute to your observed disconnects. The greater the gap the more opportunity there is to make improvements.
Use your process requirements as selection criteria for new software and share your process requirements with potential vendors.
The CRM world can consist of five categories to address the right issues to retain customers. They are:
Marketing automation: Generates personalization, profiling, telemarketing, e-mail marketing, or campaign management projects. Personalization and content management enable you to target and tailor communication by making the customer interaction a unique and beneficial experience. These initiatives are designed to achieve the right mix of your company’s products or services for each customer. They involve understanding what customers do and want, matching that knowledge with product or service information, presenting opportunities to customers, and measuring success. Analytical CRM consists of data marts, decision support tools, customer behavior modeling, and analytical tools.
Sales automation: Provides basic sales automation capabilities with contact, account, opportunity, activity management, and proposal generators. Sales projects might be related to client or campaign management, sales configuration, call management, contact management, advertisement management, or SFA. E-sales are revenue-generating functions of the Internet strategy. Partner relationship management (PRM) includes third-party sales channel merchandising, promotions and discounts, collaboration and planning, measurement, billing, and product returns.
Let us understand the remaining three views of CRM:
Service and service fulfillment: Provides initiatives in the area of e-mail response management, telephony capabilities, computer-telephony integration, queue and workflow management, interactive voice response, and predictive dialing.
Customer self-service: Provides customers with services that they can directly invoke such as Web self-service, search, interactive chat, e-mail, VoIP, browser and application sharing, conferencing, and call me capabilities. E-CRM is customer management for e-businesses that need to confront the complexity of managing sophisticated customers and business partners in various media.
E-commerce: Provides facilities such as shopping, marketplace, transaction, and payment processing. E-commerce capabilities can be some essential CRM projects for companies to pursue, depending on their readiness for handling transactions via multiple methods.
After companies implement a CRM system, they often feel the effects of what is called a CRM-induced culture change resulting from the influence of CRM on behavioral patterns across an organization.
After learning of all the enterprise integration applications that can be installed in an organization, let us now understand how an organization uses enterprise portals to access this Web-based information.
An enterprise portal is a Web interface that provides a single entry point for all accessing organizational services and information so that all information appears to be coming from one source.
Let us consider an example. When Plumtree introduced the first portal product in 1998, the portal provided users with one place to access all the content and services they needed to do their work. Over the next few years, Plumtree expanded its suite of products or applications to integrate collaboration, content management, and search to meet business problems. Such business applications increase sales productivity, streamline supplier collaboration, perform research and development, and improve call center management.
Over the last few years, Plumtree has implemented enterprise portal solutions in seven service-oriented application categories:
Collaborative workspace applications: Organize ad hoc or established project workgroups, cross-functional or departmental teams, and online workspaces. Across the enterprise individuals use these interactive workspaces to collaborate on projects, set schedules, assign tasks, share documents, and exchange ideas. Geographically dispersed project teams can interact with other resources integrated into the portal.
Customer service applications: Draw heavily on the portal’s search and categorization services to create a knowledgebase of support articles and industry research. Virtually all support applications also offer online collaboration and direct access to systems that track invoices, order status, inventory, and pricing.
Employee services applications: Integrate corporate communications, self-service transactions, policy documents, and key business processes in online resource centers. These applications give employees, retirees, and their spouses everything they need to be productive and motivated without costly paperwork and training. Beyond simple, Web-enabling human resources systems, employee services applications can index policy and procedure documents for easy access, integrate third-party services for benefits and pension plans, and allow employees to post ideas and questions to improve the workplace.
Government-to-citizen applications: Help citizens find critical information, collaborate with city officials, and maximize existing technology investments. Federal, state, and local governments and agencies need to make critical data available to their constituents anytime and from anywhere. Large amounts of information, proprietary legacy systems, and budgetary shortfalls have made this task a challenge. As a result, agencies are deploying service-oriented applications.
Process applications: Are likely to return a higher ROI than portal experiences that only present information. These applications typically provide information to users at key decision points within a process.
Store applications: Assist retailers, their employees, suppliers, and customers in the sales process. Retailers rely on IT to reduce the operating costs of stores, empower store managers and sales associates with the right information, and provide better customer service. Retailers deploy service-oriented applications to combine data and functionality from many existing systems with new services to meet the needs of store managers, sales associates, suppliers, and corporate office employees.
Sales support applications: Delivers popular applications through a portal. Rather than just Web enabling a CRM system, most sales support applications combine reports from multiple systems measuring customer satisfaction, sales performance, and inventory.
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