Part II Using Information Systems 9 II USING

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LEARNING GOALS • Describe the need for business integration. • Explain how organizations can use information systems to integrate supply chains. • Describe how enterprise resource planning systems integrate internal business processes. • Describe how businesses can use customer relationship management systems to improve the customer experience. • Explain the risks involved in implementing integrated systems and how they can be overcome. • Discuss the problems associated with integrating information systems on a global basis. Copyright © 2005 Prentice Hall, Inc. 2

Business Integration at the Bead Bar • Expansion and growth generate increased need for integration. – Finance – Sales – Purchasing • Meredith – Needs an overall view of the business • Suzanne – Needs help managing the increased complexity of additional studios’ personnel, budgets, and inventory • Leda – Needs to improve interaction with franchises • Mitch – Needs to manage more sales people entering new markets • Julia – Needs increased functionality in the financial software • Miriam – Wants to know information systems can be used to keep in better contact with their increasing customer base. Copyright © 2005 Prentice Hall, Inc. 3

Business Integration at the Bead Bar (continued) • Rachel – E-business and growth of locations means increased need to manage inventories and order fulfillment • Jim – Growth means we need a better way to handle job candidates, employee benefits, and employee reviews Copyright © 2005 Prentice Hall, Inc. 4

Business Process Integration • Many business processes have their own computer systems and do not share data in a timely and effective manner. • Even enterprise systems need to be coordinated – Supply chain management (SCM) – provide a direct electronic connection with suppliers – Enterprise resource planning (ERP) – integrate all the internal processes through a common information system – Customer relationship management (CRM) – information system to manage all the functions that deal with customers – Ensure that SCM, ERP, and CRM have the right hardware, databases, and networks Copyright © 2005 Prentice Hall, Inc. 5

Supply Chain Management (SCM) • Stages of SCM – Planning – develop and implement processes that attempt to forecast demand for products and services – Sourcing – determine who should supply the items required – Production – make the product • Schedule production • Ensure raw materials are on hand when needed – Product delivery (logistics) • Everything from receiving a customer inquiry to invoicing • Warehouse management is one very important factor – Returns – returns of raw materials as well as finished goods Copyright © 2005 Prentice Hall, Inc. 8

Electronic Data Interchange (EDI) • The direct computer-to-computer transfer of business documents in electronic form – Eliminates paperwork – Reduces errors – Speeds supply process • A key aspect of supply chain management • Allows companies to streamline their operations by sharing more data with companies in their supply chain • EDI relies on a pair of standards – ANSI X 12 – used in North America – EDIFACT – international, but widely used in Europe Copyright © 2005 Prentice Hall, Inc. 9

Integrating Internal Processes with ERP • ERP systems integrate all the functions and departments within an organization through a common information system • Most common modules for an ERP system – – – Finance Manufacturing Human resources Procurement Customer relationship management • ERP software can be customized to keep critical business processes Copyright © 2005 Prentice Hall, Inc. 12

Factors in ERP System Success • Active support of upper management • Having the best people on the implementation team • Limiting customization • Managing the time line well • Soliciting user involvement Copyright © 2005 Prentice Hall, Inc. 14

Integrating with CRM • 80/20 rule • CRM system manages all the ways an organization interacts with customers • Goal of CRM is to increase sales and repeat business by learning the customer – Remember the customer’s needs and preferences – Determine the customer’s satisfaction with service – Determine which customers are in the magic 20 percent (or have the potential to become part of it) Copyright © 2005 Prentice Hall, Inc. 15

Integrating with CRM • Although IT is a core piece of an overall CRM strategy, it should not be the only piece. • CRM software modules include – Personalization – Marketing automation – Sales force automation – Service and support Copyright © 2005 Prentice Hall, Inc. 16

CRM Module Functions • Personalization – One-to-one marketing through personalized products and services – Amazon. com • Marketing automation – – Determine market segments Planning and implementing campaigns Analyzing results Segment customers • Demographics • Past purchases • Preferred method of shopping Copyright © 2005 Prentice Hall, Inc. 17

CRM Module Functions (continued) • Sales force automation – Managing contacts and leads by storing customers’ basic demographic data – Provide to-do lists and calendars – Recognize early customer trends – Forecasts of future sales • Service and support – After-sales support – Complaint resolution – Returns Copyright © 2005 Prentice Hall, Inc. 18

Implementing Integrated Systems • Cost varies – – Which modules are selected How much customization is required Average cost is $15 M Payback period of 31 months • Application Service Providers (ASPs) – Leases expensive resources to company on a per user or per month basis – ASPs help reduce the risk of projects such as ERP and CRM Copyright © 2005 Prentice Hall, Inc. 19

Global Integration • A global information system spans more than one country • Challenges of global systems – Technical standards – e. g. from country to country, vast differences may exist in information technology infrastructure – Legal issues – e. g. laws that limit what data can transfer across international borders – Financial and accounting standards – e. g. handle local standards and report to HQ in a different format – Cultural differences – e. g. how do customers like to pay for goods – credit card, check, cash, other Copyright © 2005 Prentice Hall, Inc. 20

Bead Bar Consultant • How Integration Issues Affect the Bead Bar – Meredith – Cost versus functionality of ERP systems – Suzanne – Should it be ERP? Or CRM? Both have advantages and disadvantages – Leda – Likes vertical market integration to ensure franchisees so not purchase supplies elsewhere – Mitch – Sales force automation would greatly improve management of the sales force – Julia – SCM helps to reduce inventory costs whereas ERP financials would produce financial statements more quickly Copyright © 2005 Prentice Hall, Inc. 21

Bead Bar Consultant (continued) – Miriam – Wants CRM to manage marketing campaigns – Rachel – SCM or ERP procurement module to manage inventory and costs – Jim – ERP human resources module would improve management of HR processes Copyright © 2005 Prentice Hall, Inc. 22

Learning Goals Summary In this chapter you have learned: ü The need for business integration ü How organizations can use information systems to integrate supply chains ü How enterprise resource planning systems integrate internal business processes ü How businesses can use customer relationship management systems to improve the customer experience ü The risks involved in implementing integrated systems and how they can be overcome ü The problems associated with integrating information systems on a global basis Copyright © 2005 Prentice Hall, Inc. 23