Download Intro to Information Systems

CHAPTER 7
Electronic Business Systems
Learning Objectives
Identify the following cross-functional enterprise
systems, and give examples of how they can
provide significant business value to a company:
1.
a.
b.
c.
d.
e.
f.
Enterprise resource planning
Customer relationship management
Supply chain management
Enterprise application integration
Transaction processing systems
Enterprise collaboration systems
Learning Objectives
2.
3.
Give examples of how Internet and other
information technologies support business
processes within the business functions of
accounting, finance, human resource management,
marketing, and production and operations
management.
Understand the need for enterprise application
integration to improve support of business
interactions across multiple e-business applications.
Case 1: Forex Capital Markets and Wyse Technology:
The Business Benefits of CRM




International buying and selling of global currencies is the
largest and most liquid market in the world.
Microsoft Excel & Access programs could not handle the
increase in business volume and customer information could
not be easily shared.
FXCM decide to implement CRM software from
Salesforce.com to handle the complexities of their business.
CRM software enables sales and marketing professionals to
increase sales revenue by providing more and better services
to customers and prospects.
Case Study Questions
1.
2.
Why can’t Microsoft Excel spreadsheets and
Access database software handle the customer
relationship needs of companies like FXCM? What
functions do CRM systems like Salesforce provide
to a company that these software packages do
not?
What business benefits has the Salesforce CRM
system provided to FXCM? To Wyse Technology?
Case Study Questions
3.
Salesforce.com is an example of an ASP
(application service provider), which we discussed
in Chapter 4. What benefits do you see in this
case for that method of providing a CRM system to
a company versus installing a CRM software
package? What disadvantages might arise?
Which method would you prefer? Why?
Real World Internet Activity
1.
The success of Salesforce.com hurt traditional software
companies like Siebel Systems, which only offered CRM as a
complex installed software solution. Siebel, since acquired by
Oracle, responded with Siebel OnDemand, an ASP solution
like Salesforce. Other companies jumped into the CRM/ASP
market to compete with Salesforce.com.

Use the Internet to research these companies and discover how
Salesforce is responding to this intense competition for customers in
the CRM market.
Real World Group Activity
2.
The CRM solutions in this case highlight how much
information on customers and prospects is easily
captured, integrated with other customer data,
and accessible to company employees and even
business partners. How are FXCM and Wyse
securing this sensitive data? Is it enough? What
else could be done to protect customer privacy
and security?

Discuss how companies and their customers can benefit
from CRM systems while still protecting customer
privacy.
Cross-functional Systems


Cross the boundaries of traditional business
functions
In order to reengineer and improve vital business
processes all across the enterprise
Enterprise Application Architecture
Source: Adapted from Mohan Sawhney and Jeff Zabin, Seven Steps to Nirvana: Strategic
Insights into e-Business Transformation (New York: McGraw-Hill,2001), p. 175.
Customer Relationship Management (CRM)

CRM uses technology to
 Create
a cross-functional enterprise system
 That integrates and automates many of the processes in
sales, marketing and customer service that interact with
customers
 Create a framework of web-enabled software and
databases that integrate these processes with the rest of
the company’s processes
CRM Applications Clusters
CRM applications

Contract and Account Management
Helps sales, marketing and service professionals
 Capture and track data about past and planned contacts
with customers and prospects


Sales
Provides sales reps with software tools and data they need to
support and manage sales activities
 Cross-selling is trying to sell a customer of one product with a
related product
 Up-selling is trying to sell customer a better product than they
are currently seeking

CRM applications

Marketing and Fulfillment
 Help
marketing professionals accomplish direct
marketing campaigns by tasks such as
 Qualifying leads for targeted marketing and scheduling
and tracking direct marketing mailings
CRM applications

Customer Service and Support
Provides sales reps with software tools and database access
to customer database shared by sales and marketing
professions
 Helps create, assign and manage requests for service
 Call center software routes calls to customer support agents
based upon their skills and type of call
 Help desk software provides relevant service data and
suggestions for resolving problems for customer service reps
helping customers with problems

CRM applications

Retention and Loyalty Programs
 Try
to help a company identify, reward, and market to
their most loyal and profitable customers
 Data mining tools and analytical software
 Customer data warehouse
CRM supports customer life cycle
CRM benefits




Identify and target best customers
Real-time customization and personalization of
products and services
Track when a customer contacts a company
Provide consistent customer experience and superior
service and support
Reasons for CRM failures



Lack of understanding and preparation
Rely on application to solve a problem without first
changing the business processes
Business stakeholders not participating and not
prepared
Enterprise Resource Planning (ERP)

Cross-functional enterprise system
 with
an integrated suite of software modules
 that support the basic internal business processes of a
company
ERP application components
Business benefits of ERP




Quality and efficiency
Decreased costs
Decision support
Enterprise agility
Costs of implementing a new ERP
Causes of ERP failure



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

Underestimating the complexity of planning,
development and training
Failure to involve affected employees in planning
and development
Trying to do too much too fast
Insufficient training in new work tasks
Failure to do enough data conversion and testing
Over reliance on ERP vendor or consulting
companies
Supply Chain Management (SCM)



A cross-functional interenterprise system
To help support and manage the links between a
company’s key business processes
And those of its suppliers, customers and business
partners
SCM goal


Fast, efficient, low-cost network of business
relationships or supply chain to get a company’s
products from concept to market
A supply chain:
 Interrelationships
with suppliers, customers, distributors,
and other businesses that are needed to design, build
and sell a product
SCM
Electronic Data Interchange (EDI)

EDI:
 The
electronic exchange of business transactions
 Over the Internet and other networks
 Between supply chain trading partners
EDI Examples
Role of SCM
Goals and Objectives of SCM
Causes of problems in SCM





Lack of proper demand-planning knowledge, tools
and guidelines
Inaccurate or overoptimistic demand forecasts
Inaccurate production, inventory, and other data
Lack of adequate collaboration within the company
and between partners
SCM software considered immature, incomplete and
hard to implement
Enterprise Application Integration (EAI)


EAI connects cross-functional systems
Serves as middleware to
Provide data conversion
 Communication between systems
 Access to system interfaces

How EAI works
Enterprise Collaboration Systems (ECS)

ECS
 Cross-functional
IS that enhance communication,
coordination and collaboration among the members of
business teams and workgroups
ECS Goals



Communicate: share information with each other
Coordinate: coordinate individual work efforts and
use of resources with each other
Collaborate: work together cooperatively on joint
projects and assignments
ECS Tools
Case 2: Yahoo, Google, and Chrysler: How
the Internet Is Changing Advertising and
Marketing




Today companies are spending more money on online
advertising.
With the increase in online advertising, Yahoo and Google have
become the most highly prized media companies in the world.
Yahoo has led the way in persuading large companies to use
online advertising instead of traditional media.
According to a survey, sixty-three percent said that online
advertising was a brand building tool “equal to or better than”
advertising on TV or in print.
Case Study Questions
1.
2.
Why are companies like Chrysler now looking
more favorably at the Internet as a great medium
for their advertising dollars? What has happened
to change their view?
How do Google’s online ad revenue sources and
strategy differ from Yahoo’s? Which online ad
strategy is superior for attracting advertising from
small companies? For attracting advertising from
large companies? Defend your position.
Case Study Questions
3.
If you were director of marketing communications
at Chrysler, how would you distribute Chrysler’s
advertising dollars among online and traditional
TV and print media? Defend your position.
Real World Internet Activity
1.
Google and Microsoft’s MSN realize that they must
move beyond search advertising revenue to block
Yahoo’s attempt to dominate the move of big
advertisers to online advertising. Use the Internet to
discover how the three rivals are faring in the
battle for online advertising and the reasons for
any changes you find.
Real World Group Activity
2.
Online advertising can be viewed as an
entertainment experience, as a helpful source of
clues to find what you and other customers want, or
as a bothersome intrusion into your online
experience and right to privacy.

Discuss this issue. Attempt to formulate a joint position
on these aspects of online advertising to present to the
rest of the class.
Functional Business Systems


A variety of information systems (transaction
processing, management information systems,
decision support, etc.)
That support the business functions of
 Accounting,
finance, marketing, operations management
and human resource management
Examples of functional information systems
Marketing Information Systems
Interactive marketing

Interactive marketing:
A
customer-focused marketing process
 Using the Internet, intranets, and extranets
 To establish two-transactions
 Between a company and its customers or potential
customers

Goal:
 to
profitably attract and keep customers
 who will become partners with the business
 in creating, purchasing and improving products and
services
Targeted Marketing

An advertising and promotion management concept
that includes five targeting components
Targeted Marketing Components

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
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Community – customize advertising to appeal to people of
specific virtual communities
Content – advertising placed on a variety of selected websites
aimed at a specific audience
Context – advertising placed on web pages that are relevant to
the content of a product or service
Demographic/Psychographic – web marketing efforts aimed at
specific types or classes or people
Online Behavior – promotion efforts tailored to each visit to a
site by an individual, e.g., using cookies files
Sales Force Automation



Outfit sales force with notebook computers, web
browsers and sales contract management software
Connect them to marketing websites and company
intranet
Goal:
 Increase
personal productivity
 Speeds up capture and analysis of sales data from the
field to marketing managers
 Gain strategic advantage
Manufacturing Information
Systems


Support the production/operations function
Includes all activities concerned with planning and
control of producing goods or services
Computer-Integrated Manufacturing
CIM Objectives



Simplify production processes, product designs, and
factory organization as a vital foundation to
automation and integration
Automate production processes and the business
functions that support them with computers,
machines, and robots
Integrate all production and support processes using
computer networks, cross-functional business
software, and other information technologies
CIM Systems



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Computer-aided manufacturing (CAM) - automate
the production process
Manufacturing execution systems (MES) –
performance monitoring information systems for
factory floor operations
Process Control – control ongoing physical processes
Machine Control – controls the actions of machines
Human Resource Management (HRM)

Information systems designed to support
 Planning
to meet the personnel needs of the business
 Development of employees to their full potential
 Control of all personnel policies and programs
HRM Systems
HRM and the Internet



Recruiting employees using the corporate website
and commercial recruiting services
Posting messages in selected Internet newsgroups
Communicating with job applicants via e-mail
HRM and Corporate Intranets






Process common HRM applications
Allow HRM department to provide around-the-clock
services
Disseminate valuable information faster than
through previous company channels
Collect information from employees online
Allow managers and other employees to perform
HRM tasks with little intervention by the HRM
department
Training tool
Employee Self-Service (ESS)

Intranet applications that allow employees to
 View
benefits
 Enter travel and expense reports
 Verify employment and salary information
 Update their personal information
 Enter data that has a time constraint to it
Accounting Information Systems



Record and report the flow of funds through an
organization
Produce financial statements
Forecasts of future conditions
Accounting Information Systems
Six essential Accounting Information
Systems



Order Processing – Captures and processes
customer orders and produces data for inventory
control and accounts receivable
Inventory Control – Processes data reflecting
changes in inventory and provides shipping and
reorder information
Accounts Receivable – Records amounts owed by
customers and produces customer invoices, monthly
customer statements, and credit management
reports
Six essential Accounting Information
Systems



Accounts Payable – Records purchases from,
amounts owed to, and payments to suppliers, and
produces cash management reports
Payroll – Records employee work and compensation
data and produces paychecks and other payroll
documents and reports
General Ledger – Consolidates data from other
accounting systems and produces the periodic
financial statements and reports of the business
Financial Management Systems

Support business managers and professionals in
decisions concerning
 The
financing of a business
 The allocation and control of financial resources within a
business
Financial Management System Examples
Case 3: Tesco: Applying Lean Logistics to Supply Chain
Management



Many companies are using lean logistics management to save
money and Tesco is one example.
With lean logistics, companies can eliminate waste along with
huge opportunities for savings while increasing the satisfaction of
the end customer.
At Tesco, with lean logistics system,



the total throughput time, from the filling line at the supplier to the
customer leaving the store with the cola, has declined from 20 days
to 5 days.
The number of inventory stocking points has been reduced from five
to two, and
the supplier’s distribution center for the items has disappeared.
Case Study Questions
1.
2.
What key insights of Tesco’s SCM director Graham Booth
helped revolutionize Tesco’s supply chain and range of retail
store formats? Can these insights be applied to any kind of
retail business? Why or why not?
How did Dan Jones and his research group from the Cardiff
Business School of Wales demonstrate the inefficiencies of the
Tesco and Britvic supply chains? Can this methodology be
applied to the supply chain of any kind of business? Why or
why not?
Case Study Questions
3.
What are the major business and competitive
benefits gained by Tesco as the result of its supply
chain initiatives? Can other retail chains and retail
stores achieve some or all of the same results?
Defend your position with examples of actual
retail chains and stores you know.
Real World Internet Activity
1.
Use the Internet to investigate Tesco’s present financial
success and competitive position and what other retailers in
Britain are doing to compete with Tesco. Then investigate if
other retail chains or stores in the United States or any
other country seem to be applying a supply chain
management strategy similar to Tesco’s.
Real World Group Activity
2.
Many retail chains and stores have loyalty cards
similar to Tesco’s. Use the Internet to research the
loyalty-card performance of these companies.

Discuss how these and other retail stores you know
could improve their loyalty-card performance
compared with Tesco’s stellar performance with its
customers.