TU09 - Enterprise Applications PDF

INFORMATION SYSTEMS: THEORY & PRACTICE TU 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Prof. Dr. Paul Drews Intro Case Study – Lenzing Group 2 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Learning Objectives § How do enterp...

INFORMATION SYSTEMS: THEORY & PRACTICE TU 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Prof. Dr. Paul Drews Intro Case Study – Lenzing Group 2 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Learning Objectives § How do enterprise systems help businesses achieve operational excellence? § How do supply chain management systems coordinate planning, production, and logistics with suppliers? § How do customer relationship management systems help firms achieve customer intimacy? § What are the challenges that enterprise applications pose and how are enterprise applications taking advantage of new technologies? 3 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Agenda 1. Enterprise Systems 2. Supply Chain Management Systems 3. Customer Relationship Management Systems 4. Enterprise Applications: Challenges and Opportunities 4 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Systems Enterprise systems § Enterprise resource planning (ERP) systems § Suite of integrated software modules and a common central database § Collects data from many divisions of firm for use in nearly all of firm’s internal business activities § Information entered in one process is immediately available for other processes 5 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS How Enterprise Systems Work Enterprise systems feature a set of integrated software modules and a central database by which business processes and functional areas throughout the enterprise can share data. Figure 9-1 6 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Systems Enterprise software § Built around thousands of predefined business processes that reflect best practices § Finance and accounting § Human resources § Manufacturing and production § Sales and marketing § To implement, firms: § Select functions of system they wish to use. § Map business processes to software processes. § Use software’s configuration tables for customizing. 7 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Systems Business value of enterprise systems § Increase operational efficiency § Provide firm-wide information to support decision making § Enable rapid responses to customer requests for information or products § Include analytical tools to evaluate overall organizational performance and improve decision- making 8 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Prominent Vendors of ERP Systems 9 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Prominent Vendors of ERP Systems (Global Top 5) SAP Oracle Microsoft Infor Epicor > 35,000 customers, > 37,000 application > 83,000 ERP 3rd largest global ERP Long history of 120 countries customers customers maker reputable products Claim #1 CRM market Claim #1 CRM market Strong SMB/mid-market > 70,000 customers > 20,000 customers, share leader share leader solution Several different ERP 140 countries, 30 Definite #1 ERP market #2 ERP market share Very strong partner systems languages share leader leader channel Vertically focused ERP In major growth mode Built the client/server 30 year proven Only sold through VAR solutions Reasonable VAR ERP market credibility channel Lean manufacturing channel Very impressive New SOA architecture Multiple ERP products capabilities Several strong industry distribution/SCM Deep software ERP road map Complex and discrete solutions Several industry functionality questionable manufacturing ERP consultant strength solutions Outrageous flexibility Solutions often vary by Process manufacturing MS/SQL/SOA Netweaver, SQL and a Technology is the global region Strong distribution and technology chasm of technologies Oracle stack MS/.Net/SQL SCM Low to moderately Priced at the high end Priced at the high end technology Low to moderately priced Low to moderately priced priced Quelle: http://www.erpsoftware360.com/erp-software.htm 10 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Agenda 1. Enterprise Systems 2. Supply Chain Management Systems 3. Customer Relationship Management Systems 4. Enterprise Applications: Challenges and Opportunities 11 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems Supply chain § Network of organizations and processes for: § Procuring materials, transforming materials into products, and distributing the products § Upstream supply chain: § Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them § Downstream supply chain: § Organizations and processes responsible for delivering products to customers § Internal supply chain 12 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Nike’s Supply Chain This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles. Figure 9-2 13 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems Supply chain management § Inefficiencies cut into a company’s operating costs § Can waste up to 25 percent of operating expenses § Just-in-time strategy § Components arrive as they are needed § Finished goods shipped after leaving assembly line § Safety stock: buffer for lack of flexibility in supply chain § Bullwhip effect § Information about product demand gets distorted as it passes from one entity to next across supply chain 14 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS The Bullwhip Effect Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers. Figure 9.3 15 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems Supply chain management software § Supply chain planning systems § Model existing supply chain § Enable demand planning § Optimize sourcing, manufacturing plans § Establish inventory levels § Identify transportation modes § Supply chain execution systems § Manage flow of products through distribution centers and warehouses 16 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems § Global supply chain issues § Greater geographical distances § Greater time differences § Participants from different countries § Different performance standards § Different legal requirements § Internet helps manage global complexities § Warehouse management § Transportation management § Logistics § Outsourcing 17 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems Supply chain management § Push-based model (build-to-stock) § Earlier SCM systems § Schedules based on best guesses of demand § Pull-based model (demand-driven) § Web-based § Customer orders trigger events in supply chain § Internet enables move from sequential supply chains to concurrent supply chains § Complex networks of suppliers can adjust immediately 18 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Push- Versus Pull-Based Supply Chain Models Figure 9-4 The difference between push- and pull-based models is summarized by the slogan “Make what we sell, not sell what we make.” 19 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS The Emerging Internet-Driven Supply Chain The emerging Internet-driven supply chain operates like a digital logistics nervous system. It provides multidirectional communication among firms, networks of firms, and e- marketplaces so that entire networks of supply chain partners can immediately adjust inventories, orders, and capacities. Figure 9-5 20 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Supply Chain Management Systems Business value of SCM systems § Match supply to demand; reduce inventory levels § Improve delivery service § Speed product time to market § Use assets more effectively § Reduced supply chain costs lead to increased profitability § Total supply chain costs can be 75 percent of operating budget § Increase sales 21 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Agenda 1. Enterprise Systems 2. Supply Chain Management Systems 3. Customer Relationship Management Systems 4. Enterprise Applications: Challenges and Opportunities 22 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management Systems § Customer relationship management (CRM) § Knowing the customer § In large businesses, too many customers and too many ways customers interact with firm § CRM systems § Capture and integrate customer data from all over the organization § Consolidate and analyze customer data § Distribute customer information to various systems and customer touch points across enterprise § Provide single enterprise view of customers 23 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management (CRM) CRM systems examine customers from a multifaceted perspective. These systems use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing. Figure 9-6 24 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management Systems CRM software § Packages range from niche tools to large-scale enterprise applications. § More comprehensive packages have modules for: § Partner relationship management (PRM) § Integrating lead generation, pricing, promotions, order configurations, and availability § Tools to assess partners’ performances § Employee relationship management (ERM) § Setting objectives, employee performance management, performance-based compensation, employee training 25 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management Systems CRM software (cont.) § CRM packages typically include tools for: § Sales force automation (SFA) § Sales prospect and contact information, sales quote generation capabilities § Customer service § Assigning and managing customer service requests, Web-based self-service capabilities § Marketing § Capturing prospect and customer data, scheduling and tracking direct-marketing mailings or e-mail, cross-selling 26 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS How CRM Systems Support Marketing Customer relationship management software provides a single point for users to manage and evaluate marketing campaigns across multiple channels, including email, direct mail, telephone, the web, and social media. Figure 9-7 27 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS CRM Software Capabilities The major CRM software products support business processes in sales, service, and marketing, integrating customer information from many different sources. Included are support for both the operational and analytical aspects of CRM. Figure 9-8 28 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Loyalty Management Process Map Figure 9-9 This process map shows how a best practice for promoting customer loyalty through customer service would be modeled by customer relationship management software. The CRM software helps firms identify high-value customers for preferential treatment. 29 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management Systems § Operational CRM § Customer-facing applications such as sales force automation call center and customer service support, and marketing automation § Analytical CRM § Based on data warehouses populated by operational CRM systems and customer touch points § Analyzes customer data (OLAP, data mining, etc.) § Customer lifetime value (CLTV) 30 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Analytical CRM Data Warehouse Analytical CRM uses a customer data warehouse and tools to analyze customer data collected from the firm's customer touch points and from other sources. Figure 9-10 31 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Customer Relationship Management Systems § Business value of CRM systems § Increased customer satisfaction § Reduced direct-marketing costs § More effective marketing § Lower costs for customer acquisition/retention § Increased sales revenue § Churn rate § Number of customers who stop using or purchasing products or services from a company § Indicator of growth or decline of firm’s customer base 32 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Example: Salesforce - Products Source: salesforce.com 33 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Example: Salesforce - Pricing Source: salesforce.com 34 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Agenda 1. Enterprise Systems 2. Supply Chain Management Systems 3. Customer Relationship Management Systems 4. Enterprise Applications: Challenges and Opportunities 35 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Applications: Challenges and Opportunities Enterprise application challenges § Expensive to purchase and implement enterprise applications § Many projects experience cost overruns § Long development times § Technology changes § Business process changes § Organizational learning, changes § Switching costs, dependence on software vendors § Data standardization, management, cleansing 36 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Applications: Challenges and Opportunities Next-generation enterprise applications § Enterprise solutions/suites: § Make applications more flexible, web-enabled, integrated with other systems § Cloud-based versions § Functionality for mobile platform § Versions also available for small and medium-sized businesses 37 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Enterprise Applications: Challenges and Opportunities Next-generation enterprise applications (cont.) § Social CRM § Incorporating social networking technologies § Company social networks § Monitor social media activity; social media analytics § Manage social and web-based campaigns § Business intelligence § Inclusion of BI with enterprise applications § Flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, data visualization 38 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS Tasks for this week § T9-1. Please actively read chapter 9 - including the case studies. (3-4 hours) § T9-2. Watch some promotion videos about ERP/SCM/CRM systems (links see Moodle). 39 | TU 9 | OPERATIONAL EXCELLENCE AND CUSTOMER INTIMACY | PROF. DR. PAUL DREWS CONTACT PROF. DR. PAUL DREWS Institute of Information Systems Universitätsallee 1 | 21335 Lüneburg Fon 04131.677-1993 | [email protected] www.leuphana.de/institute/iis/personen/paul-drews