Interorganizational Systems, ERPs and CRM

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1 Interorganizational Systems, ERPs and CRM Athens University of Economics and Business Department of Management Science and Technology ISTLab/ Wireless Research Center George M. Giaglis

2 Learning Objectives Understand the essentials of interorganizational systems and cross-functional corporate support Understand the essentials of enterprise systems and computerized supply chain management. Describe the need for integrated software and how ERP does it. Describe CRM and its support by IT

3 Traditional viewpoint on ICT business support

4 The Functional Perspective of ICT Marketing o Identify customers o Determine what they want o Planning products o Advertising and promoting products o Determine prices for products Sales o Contact customers o Sell the product o Take the order o Follow-up on the sale o 5 year sales forecast

5 The Functional Perspective of ICT Manufacturing o Control Equipment and machinery o Design new products o When and quantity of products to produce o New production facilities o Generate the work order Purchasing o Which vendors o Quantity to purchase o Handle delivery discrepancies o Generate the purchase order o Supplier evaluation

6 The Functional Perspective of ICT Finance o Financial Assets o Investment management o Banking o Long term budgets Accounting o General ledger o Accounts Receivable o Payroll o Depreciation Human Resources o Employee wages, salaries & benefits o Long term labor requirements o Track employee leaves o Track employee skills o Interview and review employees

7 The Problem The traditional functional/hierarchy view of organizations tends to lead to: o Functional silos ( politics, power games, friction) o Information islands ( incompatible systems, systems that do not talk to each other, increased costs for system maintenance, information discrepancies) Alternative views: o Process perspective? o Supply chains? o Matrix structure?

8 The Value/Supply Chain Perspective The value chain model views activities in organizations as either primary (reflecting the flow of goods and services) or secondary (supporting the primary activities)

9 Inter-Organizational Supply Chains Upstream Downstream Supplier Manufacturer Retailer POS High inventory levels High returns Rush orders Unstable production plan Frequent changeovers High out of stocks High production and order cycle-times Lack of communication - Material needs - Order generation Long lead times Lack of visibility High inventory levels Lack of communication - Promotion plans - Forecast - Order generation Low forecast accuracy Rush orders Lost sales due to high out of stock levels High promotion leftovers and obsoletes Low on-shelf availability Low service level to POS Replenishment not consumer based

10 Typical Supply Chain Solutions Information sharing among supply chain partners (ccommerce) sometimes referred to as the collaboration supply chain is one method to overcome problems in the flow. Practices to streamline supply chain management: o Optimal Inventory Levels o Supply Chain Coordination and Collaboration o Supply Chain Teams o Performance Measurement and Metrics o Various IT-Assisted Solutions o Wireless technology o Optimal shipping plans o Strategic partnerships with suppliers o Just-in-time

11 Enterprise Resource Planning Systems (ERPs) ERP systems control all major business processes with a single software architecture in real time ERPs comprise of a set of applications that automate routine back-end operations such as: o Financial management, Inventory management, Scheduling, Order fulfillment, Cost control, Accounts payable and receivable ERPs include front-end operations such as: o POS o Field Sales o Service ERPs are reported to increase efficiency and improve quality, productivity, and profitability. EAS (Enterprise Application Suite) is a new name for formerly developed ERP systems which include (almost) all segments of business, using ordinary Internet browsers as thin clients

12 Functionality of ERP Systems Usually comprise of distinct software modules ERPs are crossfunctional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. Application areas consist of core functional area of the enterprise (even supporting entire departments) HUMAN RESOURCES WAREHOUSING & DISTRIBUTION SALES & MARKETING FINANCIAL MANAGEMENT PROCUREMENT MANAGEMENT INFORMATION PRODUCTION

13 Financial Management Functionality of ERP Systems o Accounts Receivable, Accounts Payable, Activity - Based Costing, Budget, Cash Flow, Asset Management, Financial Statements Sales & Marketing o Order Automation / Call Centers, Pricing / Price Lists, Sales Statistics, Marketing, Forecasting Production and Operations o Product Configuration, Drawing and parts revision control, Long/Medium term Production Planning, Material Requirements Planning & Scheduling, Shop Floor Control, Production Costing Procurement Management o Purchase Order Management, Supplier Evaluation, Contract Management, Receipt Quality Control

14 Functionality of ERP Systems Warehousing / Distribution o Order Receipt & Delivery, Inventory adjustments, Lot Control, Stock Management, Distribution Requirements Planning, Electronic Data Interchange (EDI), Truck Fleet Management and Audit Human Resources Management o Staff Planning, Payroll, Personnel Evaluation, Expense Management Specialized Functionality o Workflow Management o Electronic Commerce o Project Management o Call Centers / CRM

15 Major ERP Vendors By market share: SAP 38% Oracle 32% By selection: Oracle is selected 22% of the time SAP 19% Microsoft Dynamics 14%

16 ERP Deployment Strategy (1)

17 ERP Deployment Strategy (2)

18 External Consultancy & Customization Ideal when companies lack the necessary skills to manage an ERP project o A consulting team might be assigned to monitor and manage the entire ERP implementation process including planning, training, testing, implementation, and delivery of any (customized) modules. o Consultants should have the necessary (prior) experience in managing an ERP project for another company (preferably in the same sector with our company) Customization of ERPs o Might be required to minimize switching costs o Core system customization: customers require to perform changes to the software vendors proprietary code If done by external company it might imply that the ERP vendor will not support the revised functionality! o Custom extensions: customers build custom applications that run parallel to the standard system, i.e., custom extended-applications.

19 Challenges of ERP Deployment Packages often do not address company-specific business needs o ERP software is a good fit for companies that fall into well-defined industry buckets (e.g., discrete manufacturing or retail) but less of a fit for highly specialized industries Business process complexity is not always justified o Many companies have found it easier to adjust and simplify their business processes, rather than extensively modify their ERP software packages to conform to the processes ERP environments are costly to maintain o 33% of IT budget accounts to software maintenance; 25% accounts to license fees; Some companies prefer the ASP model renting the ERP infrastructure Integration with other systems is complex. o Significant data migration challenges

20 ASP Model Architecture CUSTOMER PREMISES VENDOR OPS. CENTER Vendor-supplied portal software gives a customer the same view as the vendor operations center. Vendor's on-site hardware device Firewall Using proprietary software, vendor employees monitor and manage a customer's storage. Storage infrastructure (may be direct-attached storage, SANs or NAS) SECURE NETWORK CONNECTION The customer's actual data never passes through the firewall; rather, metadata needed to manage storage flows across a secure network connection.

21 Customer Relationship Management Systems (CRM) CRM recognizes that customers are the core of a business and that a company s success depends on effectively managing relationships with them CRM systems focus on building long term and sustainable customer relationships that add value both for the customer and the company Types of CRM systems o o o Operational CRM Analytical CRM Collaborative CRM

22 Types and Functionality of CRM Systems

23 Customer Service on the Web Internet and CRM o Search and Comparison Capabilities o Free Products and Services o Technical and Other Information and Service o Allowing Customers to Order Products and Services Online o Letting Customers Track Accounts or Order Status Tools for Customer Service o Personalized Web Pages o FAQs o Chat Rooms o and Automated Response o Call Centers o Troubleshooting Tools o Wireless CRM

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