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  1. 8 Chapter Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

  2. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications STUDENT OBJECTIVES • Demonstrate how enterprise systems achieve operational excellence by integrating and coordinating diverse functions and business processes in the firm. • Demonstrate how supply chain management systems coordinate planning, production, and logistics with suppliers.

  3. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications STUDENT OBJECTIVES • Demonstrate how customer relationship management systems achieve customer intimacy by integrating all customer information and making it available throughout the firm. • Assess the challenges and new opportunities raised by enterprise applications.

  4. Problem: Uncontrollable supply chain, outdated systems. Solutions: Eliminate manual procedures and implement supply chain software suite to allocate inventory more accurately and forecast demand. i2 Technologies forecasting software and SAP ERP software reduce inventory and increase sales. Demonstrates IT’s role in coordinating supply chains. Illustrates digital technology as part of a solution that can benefit both a firm and its customers. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Whirlpool Fixes Its Supply Chain

  5. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Whirlpool Fixes Its Supply Chain Interactive Session: Whirlpool • What experiences have you had with trying to purchase a product that wasn’t immediately available? • What reasons did the vendor give for the product being unavailable? • How could the vendor have managed its supply chain better? • How was the problem eventually resolved?

  6. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Systems • What Are Enterprise Systems? • Based on integrated software modules and a common central database • How Enterprise Systems Work • Best practices • Business Value of Enterprise Systems • Increase operational efficiency • Support decision making and rapid responses to customer requests • Include analytical tools to evaluate overall performance

  7. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Systems How Enterprise Systems Work Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise Figure 8-1

  8. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Systems China Telecom Turns to Enterprise Resource Planning • Read the Focus on Technology and then discuss the following questions: • What problems did China Telecom face? • How did these problems affect China Telecom’s business? • How has the company chosen to solve these problems? • What other solutions might the company have tried? • Analyze the solution that China Telecom chose from the people, technology, and organization perspectives. • Did China Telecom choose the best solution? Explain your answer.

  9. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems The Supply Chain • A network of organizations and processes for procuring raw materials, transforming them 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

  10. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems 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 8-2

  11. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Information and Supply Chain Management • Inefficiencies cut into a company’s operating costs • Just-in-time strategy • Safety stock • Bullwhip effect

  12. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Supply Chain Management Applications • Information visibility • Supply chain planning systems • Demand planning • Supply chain execution systems

  13. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Supply Chain Management and the Internet • Intranets • Extranets • Demand-driven supply chains • Push-based model • Pull-based model • Digital logistics nervous systems

  14. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Push- Versus Pull-Based Supply Chain Models The difference between push- and pull-based models is summarized by the slogan “Make what we sell, not sell what we make.” Figure 8-5

  15. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Supply Chain Management Systems Business Value of Supply Chain Management 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 • Increased sales

  16. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems What Is Customer Relationship Management? • Knowing the customer • Touch points • Single enterprise view of customers • Data and analytical tools answer important questions about customers

  17. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems 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 8-7

  18. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems IHOP Cooks Customer Data to Order • Read the Focus on Technology and then discuss the following questions: • What problems did IHOP face? • How did they affect IHOP’s business performance? • How has the company chosen to solve those problems? • What alternatives were available? • Analyze the people, organization, and technology dimensions of the solution. • Did IHOP choose the best alternative? Explain your answer.

  19. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems Interactive Session: IHOP • Visit IHOP’s Web site at www.ihop.com • How easy is it to get information from the Web site about the restaurant chain, its food, and the latest products IHOP is offering? • How easy is it to submit feedback to IHOP through the Web site? • What other feedback options does the Web site provide? • What suggestions would you make to improve the Web site?

  20. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems CRM Software • CRM packages are available with a wide spectrum of functions • Partner relationship management (PRM) • Employee relationship management (ERM) • Sales force automation (SFA) • Customer service • Marketing • Cross-selling • Up-selling • Bundling

  21. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems Operational and Analytical CRM • Operational: customer-facing applications such as sales force automation, call center and customer service support, and marketing automation • Analytical: applications that analyze customer data output from operational CRM applications • Based on data warehouses populated by operational CRM systems and customer touch points • Customer lifetime value (CLTV)

  22. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Customer Relationship Management Systems Business Value of Customer Relationship Management • Business benefits: • Increased customer satisfaction • Reduced direct-marketing costs • More effective marketing • Lower costs for customer acquisition/retention • Increased sales revenue • Churn rate

  23. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Applications: New Opportunities and Challenges Challenges and Opportunities • Technology changes • Business process changes • Organizational changes • Switching costs • Data management

  24. Essentials of Business Information Systems Chapter 8 Achieving Operational Excellence and CustomerIntimacy: Enterprise Applications Enterprise Applications: New Opportunities and Challenges Extending Enterprise Software • Getting more value from enterprise applications • Flexibility • Integration with other systems • Enterprise suites • Links to customer and supplier systems