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Chapter 9 Building Organizational Partnerships Using Enterprise Information Systems 9 -1 We have this Chapter 9 Building Organizational Partnerships Using Enterprise Information Systems 9 -1 We have this beautiful, elegant, high-I. Q. part of our business that we have been working hard on for many years. ” Jeff Bezos, Founder and CEO of Amazon. com IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -2 1. Describe what enterprise systems are and how they have Learning Objectives 9 -2 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -3 1. Describe what enterprise systems are and how they have Learning Objectives 9 -3 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Enterprise Systems 9 -4 Problem: Information systems growing over time Lack of integration Different Enterprise Systems 9 -4 Problem: Information systems growing over time Lack of integration Different computing platforms Difficult to integrate Data must be reentered from one system to another Same pieces of data stored in several versions Functional areas should be interrelated IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Legacy System Approach 9 -5 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Legacy System Approach 9 -5 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Enterprise System Approach 9 -6 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Enterprise System Approach 9 -6 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supporting Business Processes 9 -7 Internally focused systems Support functional areas, business processes, and Supporting Business Processes 9 -7 Internally focused systems Support functional areas, business processes, and decision making within an organization New information (value) is added at every step IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supporting Business Processes 9 -8 Externally focused systems (interorganizational systems) Coordinate business activities with Supporting Business Processes 9 -8 Externally focused systems (interorganizational systems) Coordinate business activities with customers, suppliers, business partners, and others who operate outside the organization Streamline the flow of information between companies IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Internally Focused Applications: Value Chain 9 -9 Flow of information through a set of Internally Focused Applications: Value Chain 9 -9 Flow of information through a set of business activities Core activities—functional areas that process inputs and produce outputs Support activities—enable core activities to take place IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Core Activities 9 -10 Inbound logistics activities Receiving and stocking raw materials, parts, and Core Activities 9 -10 Inbound logistics activities Receiving and stocking raw materials, parts, and products Cisco—delivery of electronic components from suppliers Operations and manufacturing activities Order processing and/or manufacturing of end products Dell—component parts assembled to make products Outbound logistics activities Distribution of end products Amazon. com—delivery of books to customers IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Core Activities (cont’d) 9 -11 Marketing and Sales activities Presale marketing activities (e. g. Core Activities (cont’d) 9 -11 Marketing and Sales activities Presale marketing activities (e. g. , creating marketing brochures) Amtrak—use of IS to update prices and schedules Customer service activities Post-sale activities HP—downloads related to purchased products IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Support Activities 9 -12 Administrative activities Support of day-to-day operations (for all functional areas) Support Activities 9 -12 Administrative activities Support of day-to-day operations (for all functional areas) Infrastructure activities Implement hardware and software needed Human resource activities Employee management IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Support Activities (cont’d) 9 -13 Technology development activities Design and development of applications to Support Activities (cont’d) 9 -13 Technology development activities Design and development of applications to support the primary activities Procurement activities Purchasing of goods and services (inputs into the primary activities) IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Externally Focused Applications—Value System 9 -14 Coordination of multiple value chains IS Today (Valacich Externally Focused Applications—Value System 9 -14 Coordination of multiple value chains IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Externally Focused Applications—Value System (cont’d) 9 -15 Information Flows in a Value System Upstream Externally Focused Applications—Value System (cont’d) 9 -15 Information Flows in a Value System Upstream information flow—information received from another company Downstream information flow—information produced by a company and sent to another organization IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

The Rise of Enterprise Systems 9 -16 Packaged applications Written by third-party vendors Used The Rise of Enterprise Systems 9 -16 Packaged applications Written by third-party vendors Used by many different organizations Useful for standardized, repetitive tasks Cost effective Examples: Microsoft Money and Quicken Custom applications Developed exclusively for a specific organization Designed for particular business needs Higher development costs IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

The Rise of Enterprise Systems 9 -17 Evolution of enterprise systems Organizations start with The Rise of Enterprise Systems 9 -17 Evolution of enterprise systems Organizations start with stand-alone applications Legacy systems IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Legacy Systems 9 -18 Each department has its own system Infrastructure specific Inefficient processes Legacy Systems 9 -18 Each department has its own system Infrastructure specific Inefficient processes Potential for inaccuracies IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

The Need for Integrated Enterprise Systems 9 -19 Advantages of integrated systems Centralized point The Need for Integrated Enterprise Systems 9 -19 Advantages of integrated systems Centralized point of access Conversion of information from legacy systems needed Enterprise Resource Planning (ERP) vendors offer different modules Components that can be selectively implemented Example: Modules of my. SAP business suite IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Vanilla Versus Customized Software 9 -20 Vanilla version Features and modules that an enterprise Vanilla Versus Customized Software 9 -20 Vanilla version Features and modules that an enterprise system comes with out of the box Certain processes might not be supported Customization Additional software or changes to vanilla version Always needs to be updated with new versions of vanilla IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Best Practices-Based Software 9 -21 Most ERP vendors build best practices into their ERP Best Practices-Based Software 9 -21 Most ERP vendors build best practices into their ERP systems Identify business processes in need of change Future updates are smoother if businesses change their business processes to fit with ERP systems Is following the best practices always the best strategy? If companies have competitive advantage from unique business processes IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -22 1. Describe what enterprise systems are and how they have Learning Objectives 9 -22 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Business Process Management (BPM) 9 -23 Systematic and structured improvement approach All or part Business Process Management (BPM) 9 -23 Systematic and structured improvement approach All or part of organization is involved Rethinking and redesign of business processes Became popular in 1990 s IS seen as key enabler for radical change Processes intended to be cross-functional Various related terms: IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

BPM Steps 9 -24 1. 2. 3. 4. 5. Develop a vision for the BPM Steps 9 -24 1. 2. 3. 4. 5. Develop a vision for the organization (specify business objectives) Identify critical processes that are to be redesigned Understand measure existing processes as a baseline Identify ways IS can be used for improvement Design and implement a prototype of the new processes IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Conditions Leading to a Successful BPM 9 -25 Support by senior management Shared vision Conditions Leading to a Successful BPM 9 -25 Support by senior management Shared vision by all organizational members Realistic expectations Participants empowered to make changes The right people participating Sound management practices Appropriate funding IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Enterprise Resource Planning (ERP) 9 -26 Integrating data to integrate applications Data warehouse Large, Enterprise Resource Planning (ERP) 9 -26 Integrating data to integrate applications Data warehouse Large, centralized data repository Single place for data storage and access IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Choosing an ERP System 9 -27 Control Centralized control vs. control within specific business Choosing an ERP System 9 -27 Control Centralized control vs. control within specific business units Level of detail provided to management Consistency of policies and procedures Business requirements Selection of modules Core and extended components IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Core and Extended ERP Components 9 -28 Core components—support primary internal activities Extended components—support Core and Extended ERP Components 9 -28 Core components—support primary internal activities Extended components—support primary external activities IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

ERP Limitations 9 -29 ERP falls short in communicating across organizational boundaries Not well ERP Limitations 9 -29 ERP falls short in communicating across organizational boundaries Not well suited for managing value system activities Other systems can work with ERP to provide these capabilities IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -30 1. Describe what enterprise systems are and how they have Learning Objectives 9 -30 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Relationship Management (CRM) 9 -31 IS Today (Valacich & Schneider) 3/16/2018 Copyright © Customer Relationship Management (CRM) 9 -31 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Relationship Management(CRM) (cont’d) 9 -32 The Web has changed the business Customers have Customer Relationship Management(CRM) (cont’d) 9 -32 The Web has changed the business Customers have the power Transactions vs. relationships Keeping customers satisfied is key CRM Corporate-level strategy Concentrates on the downstream information flow Attract potential customers Create customer loyalty Managers need to be able to monitor and analyze factors driving customer satisfaction IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Key Benefits of CRM 9 -33 1. 2. 3. 4. 5. 6. 7. 8. Key Benefits of CRM 9 -33 1. 2. 3. 4. 5. 6. 7. 8. Enables 24/7/365 operation Individualized service Improved information Speeds problem identification/resolution Speeds processes Improved integration Improved product development Improved planning IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Developing a CRM Strategy 9 -34 More than just software purchase and installation Enterprise-wide Developing a CRM Strategy 9 -34 More than just software purchase and installation Enterprise-wide changes IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Policy and Business Process Changes 9 -35 Policies and procedures need to reflect customerfocused Policy and Business Process Changes 9 -35 Policies and procedures need to reflect customerfocused culture IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Service Changes 9 -36 Customer-focused measures of quality Process changes to enhance customer Customer Service Changes 9 -36 Customer-focused measures of quality Process changes to enhance customer experience IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Employee Training Changes 9 -37 Employees from all business areas must value customer service Employee Training Changes 9 -37 Employees from all business areas must value customer service and satisfaction IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Data Collection, Analysis, and Sharing Changes 9 -38 All aspects of customer experience must Data Collection, Analysis, and Sharing Changes 9 -38 All aspects of customer experience must be tracked, analyzed, and shared Consider ethical concerns IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Architecture of a CRM Environment 9 -39 IS Today (Valacich & Schneider) 3/16/2018 Copyright Architecture of a CRM Environment 9 -39 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Operational CRM 9 -40 Systems for customer interaction and service Personalized and efficient customer Operational CRM 9 -40 Systems for customer interaction and service Personalized and efficient customer service Access to complete information about customer IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Sales Force Automation 9 -41 Component of operational CRM Supports day-to-day sales activities: Order Sales Force Automation 9 -41 Component of operational CRM Supports day-to-day sales activities: Order processing and tracking Account and contact management Opportunity management Sales management Territory management Customer history, preferences, (product and communication), and management Sales forecasting and performance analysis IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Advantages of Sales Force Management Systems for Sales Personnel 9 -42 IS Today (Valacich Advantages of Sales Force Management Systems for Sales Personnel 9 -42 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Advantages of Sales Force Management Systems for Sales Managers 9 -43 IS Today (Valacich Advantages of Sales Force Management Systems for Sales Managers 9 -43 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Examples of Sales Measures Tracked by SFA 9 -44 1. Revenue per sales person, Examples of Sales Measures Tracked by SFA 9 -44 1. Revenue per sales person, per territory, or as a percentage of sales quota 2. Margins by product category, customer segment, or customer 3. Number of calls per day, time spent per contract, revenue per call, cost per call, ratio of orders to calls 4. Number of lost customers period or cost of customer acquisition 5. Percentage of goods returned IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

SFA Provides Improved Understanding of Market Conditions 9 -45 1. Improved understanding of markets, SFA Provides Improved Understanding of Market Conditions 9 -45 1. Improved understanding of markets, segments 2. 3. 4. 5. 6. and customers Improved understanding of competitors Enhanced understanding of organization’s strengths and weaknesses Better understanding of economic structure of the industry Enhanced product development Improved strategy development and coordination with the sales function IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Service and Support (CSS) 9 -46 Second component of operational CRM Automation of Customer Service and Support (CSS) 9 -46 Second component of operational CRM Automation of traditional “help desk” services Customer interaction center (CIC) Multiple communication channels Customer service anytime, anywhere through any communication channel Low support cost IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Enterprise Marketing Management (EMM) 9 -47 Third component of an operational CRM Make sure Enterprise Marketing Management (EMM) 9 -47 Third component of an operational CRM Make sure right messages are sent to the right people through the right channels Customer lists need to be managed carefully Individualized attention to each potential customer Extensive analytical capabilities IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Analytical CRM 9 -48 Analysis of customer behavior and perceptions Customized marketing Up-selling, cross-selling Analytical CRM 9 -48 Analysis of customer behavior and perceptions Customized marketing Up-selling, cross-selling Retaining customers Key technologies used to create predictive models Data mining Decision support systems Continuous data collection and analysis is necessary IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Focused Business Processes Addressed by Analytical CRM 9 -49 1. 2. 3. 4. Customer Focused Business Processes Addressed by Analytical CRM 9 -49 1. 2. 3. 4. Marketing campaign management and analysis Customer campaign customization Customer communication optimization Customer segmentation and sales coverage optimization 5. Pricing optimization and risk assessment and management IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Focused Business Processes Addressed by Analytical CRM (cont’d) 9 -50 6. Price, quality, Customer Focused Business Processes Addressed by Analytical CRM (cont’d) 9 -50 6. Price, quality, and satisfaction analysis of competitors 7. Customer acquisition and retention analysis 8. Customer satisfaction and complaint management 9. Product usage, life-cycle analysis, and product development 10. Product and service quality tracking and management IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Collaborative CRM 9 -51 Effective communication with the customer from the entire organization CIC Collaborative CRM 9 -51 Effective communication with the customer from the entire organization CIC is the key Collaborative CRM enhances communication Greater customer focus Understanding of historical and current needs Lower communication barriers Communication preferences of the customer considered Increased information integration Customer IS Today (Valacich & Schneider) 3/16/2018 information shared across the organization Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Ethical Concerns with CRM 9 -52 Can personalization get too personal? IS Today (Valacich Ethical Concerns with CRM 9 -52 Can personalization get too personal? IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -53 1. Describe what enterprise systems are and how they have Learning Objectives 9 -53 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supply Chain Management 9 -54 Upstream activities Improvement of business processes spanning organizational boundaries Supply Chain Management 9 -54 Upstream activities Improvement of business processes spanning organizational boundaries Focus on upstream information flows Acceleration of product development Reduction of costs of raw materials procurement Collaboration with suppliers (supply network) Ability to compete more effectively in the market place Cost reduction Increased responsiveness to market demands IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supply Chain Management 9 -55 Supply chain: the producers of supplies that a company Supply Chain Management 9 -55 Supply chain: the producers of supplies that a company uses Suppliers work with additional suppliers Supply network Problems with not collaborating effectively Information gets distorted Forecast errors add up, leading to degradation of profitability and poor customer service “Bullwhip effect” Goals of improving upstream information flows Accelerate product development Reduce costs associated with procuring raw materials IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supply Network 9 -56 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Supply Network 9 -56 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Functions That Optimize the Supply Network (SCM Modules) 9 -57 1. 2. 3. 4. Functions That Optimize the Supply Network (SCM Modules) 9 -57 1. 2. 3. 4. 5. 6. 7. 8. 9. Supply chain collaboration Collaborative design Collaborative fulfillment Collaborative demand supply planning Collaborative procurement Production planning Supply chain event management Supply chain exchange Supply chain performance management IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

SCM Architecture 9 -58 SCM modules support two functions Supply chain planning—development of resource SCM Architecture 9 -58 SCM modules support two functions Supply chain planning—development of resource plans to support production Supply chain execution—execution of supply chain planning IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supply Chain Planning (SCP) 9 -59 Four types of plans are developed: 1. Demand Supply Chain Planning (SCP) 9 -59 Four types of plans are developed: 1. Demand planning and forecasting o Examination of historic data 2. Distribution planning o o Delivering products to consumers Warehousing, delivering, invoicing, and payment collection 3. Production scheduling o o Coordination of activities needed to create the product/service Optimization of the use of materials, equipment, and labor 4. Procurement planning o Development of inventory estimates IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Supply Chain Execution (SCE) 9 -60 Management of three key elements 1. Product flow Supply Chain Execution (SCE) 9 -60 Management of three key elements 1. Product flow o Flow of product from supplier to consumer o Automation of product returns 2. Information flow o Complete removal of paper documents o Access to current information at all times 3. Financial flow o Automatic flow of payments IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Developing an SCM Strategy 9 -61 SCM efficiency and effectiveness need to be balanced Developing an SCM Strategy 9 -61 SCM efficiency and effectiveness need to be balanced Efficiency—cost minimization Effectiveness—customer service maximization Tradeoffs—Supply chain strategy should match overall competitive strategy IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Emerging SCM Trends 9 -62 Enterprise portals—B 2 B marketplace Access point to proprietary Emerging SCM Trends 9 -62 Enterprise portals—B 2 B marketplace Access point to proprietary information Productivity gains and cost savings Distribution portals Products from single supplier to many buyers Procurement portals Procurement of products between single buyer and multiple suppliers IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Example: Distribution Portal 9 -63 Automation of business processes between supplier and multiple customers Example: Distribution Portal 9 -63 Automation of business processes between supplier and multiple customers Before transaction During transaction After transaction Trading exchanges Equilibrium between buyers and sellers Vertical markets Source: http: //www. dell. com IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Procurement Portal 9 -64 Automation of business processes between a buyer and multiple suppliers Procurement Portal 9 -64 Automation of business processes between a buyer and multiple suppliers IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Trading Exchanges 9 -65 Small companies don’t have funds for SCM Trading exchanges provide Trading Exchanges 9 -65 Small companies don’t have funds for SCM Trading exchanges provide a solution Operated by third-party vendors Revenue model Commission for each transaction Usage and association fees Advertising Many buyers and many sellers can come together Popular trading exchanges: www. scrapsite. com (steel) www. paperspace. com (paper) www. sciquest. com (medical equipment) IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Key Technologies for Enhancing SCM 9 -66 Extensible Markup Language (XML) Specifies rules for Key Technologies for Enhancing SCM 9 -66 Extensible Markup Language (XML) Specifies rules for tagging elements Specifies how information should be used and interpreted …. Useful for sharing data across applications over the web Possible replacement for EDI Customizable XML variations Extensible Business Reporting Language (XBRL) Publishing of financial information IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Radio Frequency Identification (RFID) 9 -67 Replacement for standard bar codes Transceiver and antenna Radio Frequency Identification (RFID) 9 -67 Replacement for standard bar codes Transceiver and antenna Line-of-sight reading not necessary RFID tags can contain more information than bar codes Diverse usage opportunities Scanning can be done from greater distance Passive tags—range of few feet Active tags—range of hundreds of feet IS Today (Valacich & Schneider) 3/16/2018 Source: METRO AG. Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Use of RFID in Supply Chain Management 9 -68 Pallet of inventory processed through Use of RFID in Supply Chain Management 9 -68 Pallet of inventory processed through an RFID gate Source: METRO AG. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Learning Objectives 9 -69 1. Describe what enterprise systems are and how they have Learning Objectives 9 -69 1. Describe what enterprise systems are and how they have Describe enterprise resource planning systems 2. evolved. and how they help to improve internal business processes. 3. Describe customer relationship management systems and how they help to improve downstream business processes. 4. Describe supply chain management systems and how they help to improve upstream business processes. 5. Understand utilize the keys to successfully implementing enterprise systems. IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

The Formula for Enterprise System Success 9 -70 1. Secure executive sponsorship 2. Get The Formula for Enterprise System Success 9 -70 1. Secure executive sponsorship 2. Get help from outside experts 3. Most overlooked, underestimated, and poorly budgeted expense Training can prevent dissatisfaction Take a multidisciplinary approach to implementations 5. Consultants are specifically trained Implementation tends to happen faster Thoroughly train users 4. Most failures due to lack of top-level management support Include end users from all functional areas in the implementation Look beyond ERP IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Looking Beyond ERP 9 -71 ERP systems are difficult to install, maintain, and upgrade Looking Beyond ERP 9 -71 ERP systems are difficult to install, maintain, and upgrade Service oriented architecture (SOA) Business processes are broken down into services Services are designed to achieve desired results for service consumer E. g. , Oil change Enables businesses to react more swiftly to changing needs Three principles of services Reusability Interoperability Componentization ERP vendors are offering products for transitioning to SOA IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Service Oriented Architecture 9 -72 Multiple applications can access multiple services IS Today (Valacich Service Oriented Architecture 9 -72 Multiple applications can access multiple services IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

End of Chapter Content 9 -73 IS Today (Valacich & Schneider) 3/16/2018 Copyright © End of Chapter Content 9 -73 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Opening Case—Managing in the Digital World: Amazon. com 9 -74 35 million customers worldwide Opening Case—Managing in the Digital World: Amazon. com 9 -74 35 million customers worldwide Innovations leading to satisfaction Excellent at managing entire supply chain Both acquiring the right products at the right time and shipping the products to the customers are crucial 12 North American, 7 international fulfillment centers Amazon. com manages fulfillment for Target. com as well as other businesses Independent retailers can use Amazon. com’s supply chain infrastructure on an as-needed basis IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Three-Dimensional Fabrication 9 -75 Fabbing—three-dimensional (3 D) printing 2 printer heads First lays down Three-Dimensional Fabrication 9 -75 Fabbing—three-dimensional (3 D) printing 2 printer heads First lays down a fine powder Second head is a gluing agent With each pass of the heads one layer of the model is done Prototype made in hours vs. days Fast production of prototypes that are 3 -D Usable With moving parts Hewlett-Packard (HP)—leader 3 -D HP printers now available for $1, 000 IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Outsourcing Your Mc. Donald’s Order 9 -76 Mc. Donald’s—One of America’s success stories Founded Outsourcing Your Mc. Donald’s Order 9 -76 Mc. Donald’s—One of America’s success stories Founded in 1948 in San Bernardino, California $20 billion business 31, 000 locations Outsourcing the drive-through All stores already had an Internet connection Orders processed overseas Entered into the queuing system Food quality remains the same IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

SAP—Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther 9 -77 Former SAP—Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus Wellenreuther 9 -77 Former IBM employees 80’s—multiple international subsidiaries Largest software company 39, 300 people 3 rd largest in terms of revenue Includes: ERP CRM PLM SCM SRM IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Census Computers 9 -78 2006 Census announced $600 million contract for PDAs for census Census Computers 9 -78 2006 Census announced $600 million contract for PDAs for census workers Test run unsuccessful PDAs not equipped for large volume of data Contract overruns 2008 Plans for the PDAs scrapped Contract still paid IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Customer Relationship Management (CRM) —Targeting or Discriminating? 9 -79 CRM can be called a Customer Relationship Management (CRM) —Targeting or Discriminating? 9 -79 CRM can be called a marketer’s dream Getting to know customers Maximizing the benefits gained from customers Customer segmentation Target marketing Companies need to develop ethical principles of CRM use Establish how data will be used Inform customers about the use of data Refrain from stepping over the ethical/unethical line IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

RFID on the Rise 9 -80 Market for RFID is exploding Expected growth from RFID on the Rise 9 -80 Market for RFID is exploding Expected growth from $5. 29 billion (2008) to $12. 3 billion (2010) Supply chain elements will account for majority of the growth Second largest growth segment will be consumer items Currently, largest RFID market sector is security and access control (62. 6%), followed by animals (28. 8%) IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall

Manufacturing 9 -81 Computer Aided Design (CAD) Create drawings faster Reduce cycle time Improve Manufacturing 9 -81 Computer Aided Design (CAD) Create drawings faster Reduce cycle time Improve sharing of designs 3 -D drawings and printing Computer-Aided Engineering (CAE) Testing of features before the first prototype is built Computer-Aided Manufacturing (CAM) Takes input from CAD system Controls manufacturing of components IS Today (Valacich & Schneider) 3/16/2018 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall