Enterprise Resource Planning
and
Customer Relationship Management
(ERP and CRM)
Minder Chen, Ph.D.
Professor of MIS
Martin V. Smith School of Business and Economics
CSU Channel Islands
[email protected]
ERP Market
ERP: Enterprise Resource Planning
http://www.forbes.com/sites/louiscolumbus/2013/05/12/2013-erp-market-share-update-sap-solidifies-market-leadership/
© Minder Chen, 1996-2014
ERP & CRM - 2
Major Global Software Firms
Source: http://www.forbes.com/global2000/list/ under software and programming
ERP & CRM - 3
© Minder Chen, 1996-2014
ERP Systems
• Major investment
– Cost between $50,000 and $100,000,000+
• Variety of business justifications
–
–
–
–
Replace legacy systems
Reduce cycle times
Lower operating costs
Enables better management decisions
» Real-time
» On-line
© Minder Chen, 1996-2014
ERP & CRM - 4
What is ERP?
• Enterprise-wide application packages
• Manage business processes/functions via
various modules
– Supply chain, receiving, inventory, customer
orders, production planning, shipping, accounting,
HR
• Allow automation and integration of business
processes
• Enable data and information sharing
• Incorporate and implement “best practices”
© Minder Chen, 1996-2014
ERP & CRM - 5
Evolution of ERP
• 1960s: software packages with inventory
control
• 1970s: MRP systems
– Production schedule with materials management
• 1980s: MRPII systems
– Adds financial accounting system
• 1990s: MRPII
– Integrated systems for manufacturing execution
• Late 1990s: ERP
– Integrated manufacturing with supply chain
• Late 1990s and 200X: SCM & CRM
© Minder Chen, 1996-2014
ERP & CRM - 6
Major Vendors
• SAP
– SAP Business One
http://en.wikipedia.org/wiki/SAP_Business_One
–
http://www.sap.com/solutions/business-suite/erp/demos/index.epx
• Oracle e-Business Suite
– PeopleSoft
• Microsoft
– Microsoft Dynamics
http://www.microsoft.com/dynamics/default.mspx
–
http://www.microsoft.com/dynamics/product/experience.mspx#EWC
–
http://www.microsoft.com/dynamics/ax/product/demos.mspx
http://en.wikipedia.org/wiki/List_of_ERP_vendors
© Minder Chen, 1996-2014
ERP & CRM - 7
Other Vendors (II)
• QAD: Providing innovative enterprise software
and services for global manufacturers
– http://www.qad.com/erp/
• Salesforce.com for CRM
– Software as a service (SaaS)  Cloud computing
– http://www.salesforce.com
• NetSuite
–
–
http://www.netsuite.com/portal/home.shtml
http://www.netsuite.com/portal/resource/edemo_main.shtml
• QuickBooks
– http://quickbooks.intuit.com/index.jsp
• Microsoft Accounting Express
–
http://office.microsoft.com/en-us/accountingexpress/default.aspx
© Minder Chen, 1996-2014
ERP & CRM - 8
Anatomy of an Enterprise System
Harvard Business Review article: "Putting the enterprise into the Enterprise System" by Thomas H. Davenport
© Minder Chen, 1996-2014
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Integrated Systems Approach
• Common set of applications/modules
• Overcomes inefficiencies of independent
systems
• Integrated data supports multiple business
functions
• Limit your customization
– Easier upgrades
• Consider reengineering business processes
according to ERP package’s underlying
business model (reference model / blueprint)
– Better alignment, best practices, less
customization
ERP & CRM - 10
© Minder Chen, 1996-2014
/ Web-enabled architecture
© Minder Chen, 1996-2014
ERP & CRM - 11
Procurement Tasks
Materials
Planning
External Procurement
Purchasing
Invoice Verification
Internal Procurement
Production
Master Data
Inventory Management
Material
Batches
Vendors
G/L accounts
Storage bins
Goods
Issue
Invoice
Receipt
Internal and External
Accounting
© Minder Chen, 1996-2014
Goods Receipt
Sales and
Distribution
Transfer
Posting
R
ERP & CRM - 12
ERP: Business Processes Overview
Financial Controlling
Cost Controlling
Sales
Sales order
Initial
Contact
Customer
order
Inventory
Sourcing
SOP
MPS
MRP
Production
Purchasing
Logistics Controlling
Purchase
requisite.
Delivery
Planned
order
Vendor
selection
Purch .
order
Invoicing
Prod.
order
Goods
issue
Customer
payment
Prod.
control
Invoice
verificat.
Vendor
payment
Sales, Production, Purch., Warehouse Mgmt
SOP: Sales & Operations Planning; MPS: Master Production Schedule
http://134.198.33.115/sap/1000.htm
© Minder Chen, 1996-2014
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MRP Information Flow
Outstanding
Purchase
Orders
Purchase
Requisition
Demand
Management
(MPS)
Sales
Planning &
Forecasting
Stock
(Inventory)
MRP
1
Bill of
Materials
(BOM)
2
3
4
5
A
B
C
E
F
LT: Lead Time
© Minder Chen, 1996-2014
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6
R/3 Typical
Business
R/3 SAP
Logistics
Process
Flow Blueprint
© Minder Chen, 1996-2014
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Commercial Application Package’s Implementation Strategy
• Commercial application package – a software application
that can be purchased and customized to meet the
business requirements of a large number of organizations
or a specific industry. A synonym is commercial off-theshelf (COTS) system.
– Request for proposal (RFP) – a formal document that communicates
business, technical, and support requirements for an application software
package to vendors that may wish to compete for the sale of that
application package and services.
– Request for quotation (RFQ) – a formal document that communicates
business, technical, and support requirements for an application software
package to a single vendor that has been determined as being able to
supply that application package and services.
– Gap analysis – a comparison of business and technical requirements for
a commercial application package against the capabilities and features
of a specific commercial application package for the purpose of defining
the requirements that cannot be met.
Source: Preparing and Evaluating A Request for Proposals: How to Select a Vendor (link)
© Minder Chen, 1996-2014
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Gap Analysis and Strategies to Reduce Gaps
Assess and explore ERP
Packages’ functionality & its
underlying Reference Model
Big gap
Develop a custombuilt solution
Gap
Analysis
Small gap
Define business requirements
and the firm’s processes /
procedures / business rules
AS-IS vs.TO-BE
Select the best fit
ERP package
Conduct detailed
gap analysis &
Determine ways to
reduce the gap
Assume the selected
ERP package has the
best practices
© Minder Chen, 1996-2014
Consider costs of
customization and
future upgrades
Customize the
package
Redesign the firm’s
business processes
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The Flow of Your Implementation Process
This process assumes that a software
package has been selected.
Define
project
scope &
organization
Install
software
Train project
team
Define & build
technical
infrastructures
Perform
fit/gap
analysis
Perform
testing
Build and
test
prototypes
Go
live
Tune system
performance
Convert
data
Support
system
after
conversion
Develop
interfaces
Evolve
system
Create end-user
procedures
documentation &
training
© Minder Chen, 1996-2014
ERP & CRM - 18
Why Do ERP Projects Often Fail?
• Under-estimate the complexity of planning,
development, and training for ERP
implementation.
• Fail to involve affected employees in planning
and implementation
• Try to do too much too fast
• Provide insufficient training for ERP users
• Do not conduct sufficient data conversation
and testing
• Rely too much on ERP vendors or consultants
(you cannot outsource your problems away)
http://ramialsindi.wordpress.com/2011/10/24/week-10-enterprise-resource-planning/
© Minder Chen, 1996-2014
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Implementation Success Factors
• Understand your business objectives
• Assemble a dedicated project team with the
appropriate skills
• Recognize and capitalize on re-engineering
opportunities
• Leverage the experience of others and follow a
proven formula
• Understand the system’s capabilities
• Explore new technology solutions
• Execute your implementation in phases
• Customize by prototyping
• Maintain a close relationship with your vendors
© Minder Chen, 1996-2014
ERP & CRM - 20
ERP Benefits Framework
Source: Shari Shang & Peter Seddon, Assessing and managing the benefits of enterprise
systems: the business manager’s Perspective, Info Systems Journal, (2002) 12, pp. 271–299
ERP & CRM - 21
at
© http://cba.uah.edu/guptaj/m680/erpbenefits.pdf
Minder Chen, 1996-2014
Benefits Achieved by Organizations
Improved financial management
Faster, more accurate transactions
Better managerial decision making
Improved inventory & asset mgt
Ease of expansion & increased flexibility
Improved logistics
Cycle time reduction
Improved customer service
Headcount reduction
Increased revenue
© Minder Chen, 1996-2014
ERP & CRM - 22
Maximizing Benefits from Enterprise Systems
Distinctive
Characteristics
of Packaged
Enterprise
Application
Software
(PEAS)
Packaged
Software
Features
Evolving
Functionality
Evolutionary Spiral of PEAS & Process
Change and Management Initiatives
Another cycle of ES Exploration,
Redesign and Use
Achieving Fit between PEAS and Business needs
Assess and
Explore PEAS
Assess and
Explore
Processes
Agree on
Redesigned
Processes
Changes
to PEAS
Changes
to
Process
Operational
Benefits
Managerial
Benefits
Strategic
Benefits
IT infrastructure
Benefits
Sophisticated
Knowledge
Application
Infrastructure
Net Benefits
from ES Use
Monitor Changing
Conditions &
Reevaluate
Benefits
Use ES to
Generate
Benefits
Source:
Shari
Shang
and Peter Seddon
© Minder
Chen,
1996-2014
Initiatives to
Manage the
Distinctive
Characteristics of
the PEA Software
Organizational
Benefits
ERP & CRM - 23
When, in the years after "go live", are net benefits realized?
One of the most consistent findings reported in the literature
is that there is a dip in organizational performance in the six
to twelve months after "go live".
Under Promise
and over Deliver
Design
Source: Ross & Vitale (1998)
Low employee morale
due to extra work,
mismatched processes,
data errors and change
pressures
• A possible explanation for the above pattern is organizational
learning, the time taken for people in the organization to
really understand their role in the new processes.
© Minder Chen, 1996-2014
ERP & CRM - 24
Why Do Problems Occur after "Go Live"?
Factors that might explain why problems occur
after go live (packages or websites):
1. Poor project management including poor
decisions regarding requirements and design
specifications during the implementation project
2. Inappropriate software choice and configuration,
resulting in poor fit
3. Lack of business and technical knowledge on part
of implementation team and users
4. Lack of testing before “go live”
5. Poor change management
The star witness  HealthCare.Gov went live Oct. 1, 2013
© Minder Chen, 1996-2014
ERP & CRM - 25
Customer Relationship Management (CRM)
“The purpose of
a business is to
get and keep
customers. ”*
- Peter Drucker
Watch https://www.salesforce.com/form/conf/crm-sales-indexpage-demo.jsp
*Source:
http://www.forbes.com/sites/petercohan/2012/10/01/four-ways-start-ups-can-get-and-keep-customers/print/
ERP & CRM - 26
© Minder Chen, 1996-2014
Customer Relationship Management (CRM)
The measures an organization takes to
–
–
–
–
–
–
Identify,
Select,
Acquire,
Work with,
Retain
Grow
its customers
Companies spend two to 20 times
as much finding new customers
as they do keeping old ones.
© Minder Chen, 1996-2014
ERP & CRM - 27
Customer Relationship in Business Model Canvas
Source: Steve Blank,
The Startup Owners Manual.
http://www.businessmodelgeneration.com/canvas
© Minder Chen, 1996-2014
ERP & CRM - 28
Objectives of CRM
•
•
•
•
•
The right offer (products or services)
To the right person (target marketing)
At the right time (spacing outbound calls)
Through the right channel (direct vs. channel)
Via appropriate media (phone, email, Web)
© Minder Chen, 1996-2014
ERP & CRM - 29
Customer Management Activities
Touch Points
Moments of Truth (MOT)
© Minder Chen, 1996-2014
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Highest Level Business Flow
Source: Oracle.
http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/
© Minder Chen, 1996-2014
ERP & CRM - 31
Get, Keep, and Grow Customers
Source: Steve Blank,
The Startup Owners Manual.
© Minder Chen, 1996-2014
ERP & CRM - 32
Complexity of CRM
/service
Source:
http://barnraisersllc.com/2012/06/21-experts-define-crm-words-pictures/
© Minder
Chen, 1996-2014
ERP & CRM - 33
CRM Architecture
Collaborative CRM
Operational CRM
Analytical CRM
ODS: Operational Data Stores
© Minder Chen, 1996-2014
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An Open Source CRM Solution
ERP & CRM - 35
Source:
©
Minderhttp://www.sugarforge.org/screenshots/screenshot.php/6/1861/fullsize/Accounts.jpg
Chen, 1996-2014
© Minder Chen, 1996-2014
ERP & CRM - 36
Salesforce.Com Example
Advertise your
business on Google
Take five minutes
to write your ad
and select a couple
keywords—even target
your ad locally.
People click on
your ad
When people search
on Google, your ad is
displayed and traffic
is driven to your site.
© Minder Chen, 1996-2014
Capture leads
from your Web site
Prospects fill out a
Web form, which
creates a lead in
Salesforce that is
routed to your sales
team.
Manage the follow-up
process
Log calls, send emails,
and update the status
of your leads so that
you never miss an
opportunity.
Convert leads into
customers
Update deal
information, track
opportunity
milestones, and record
all opportunity-related
interactions.
Manage customer
relationships
Acquire deep knowledge
of every account,
facilitate collaboration,
and build and maintain
strong, lasting customer
relationships.
ERP & CRM - 37
Close More Deals
Close deals faster by providing a single place for updating deal information, tracking opportunity milestones, and recording interactions.
Easily analyze your sales pipeline so you can quickly identify and eliminate any bottlenecks in the sales cycle.
Top 10 Deals
Month-to-Date Trending
Closed Business by Month
Top Sales Reps
Sales
Marketing
Open Opportunities
You can monitor
your opportunities
reports and
dashboards to keep
track of your top
deals and prioritize
your time.
Presentation
Proposal
Negotiation
Won
Yes
No
New Customers
Support
Customize Salesforce to fit your
internal sales methodologies and
Salesforce gives your entire
processes, making it easier to
company a 360-degree view of
monitor your sales pipeline.
Keep an archive of your dead opportunities. your customers and facilitates
collaboration across your
Use email marketing and call
organization, helping you build
downs to re-market to your
strong, lasting customer
archived opportunities.
relationships.
E-Business Integration Imperatives
SouthWest.com
Internet /
Virtual Private
Network
Trading Partners
Suppliers
Distributors
Business Partners
B2C
Consumers
B2B
Integration
Dollars.com
REQUIREMENTS
EAI
Standards based integration
Configurable across applications
Heterogeneous Platforms
Business process oriented
ERP Application Packages
Loosely coupled
Proprietary Applications
Supports an incremental approach
Legacy Applications
Scaleable, available, secure, manageable
© Minder Chen, 1996-2014
ERP & CRM - 39
ERP-CRM-SCM Implementation
Software
• Package (proprietary or open source)
• Hosting Solution (SaaS)
• Custom-built
Development Teams/Staffing
• In-house staff
• Outsourcing firms:
– Systems integrator/IT consulting firm (onsite vs. offsite)
– Offshoring: SI firms outside US (e.g., Tata Consultancy
Services, Wipro, Infosys)
– BPO (Business Process Outsourcing) vs. ITO
© Minder Chen, 1996-2014
ERP & CRM - 40
Backup Slides
© Minder Chen, 1996-2014
ERP & CRM - 41
A Taxonomy for
System
Development
Methodologies &
Strategies
© Minder Chen, 1996-2014
ERP & CRM - 42
Sucessive Platforms for Enterprise Applications
ERP & CRM - 43
Source:
IDC,
at http://resources.idgenterprise.com/original/AST-0104779_IDC_SAP_and_the_transition_to_the_3rd_platform_for_enterprise_applicatio_.pdf
© Minder
Chen,
1996-2014
http://www.flickr.com/photos/softwareinsider/10670994216/sizes/o/in/photostream/
ERP & CRM - 44
© Minder Chen, 1996-2014
Commercial Application Package Implementation Strategy
© Minder Chen, 1996-2014
ERP & CRM - 45
© Minder Chen, 1996-2014
ERP & CRM - 46
Social Media CRM
• "Companies have departments dedicated to
surfing the Internet and making sure their
brands are protected," says Sherry.
• Many firms have separate Twitter handles for
help, such as @ComcastCares, @DeltaAssist,
and @Zappos_Service. AT&T invites
consumers to use Facebook and Twitter to
reach the company, calling the service "social
media customer care."
© Minder Chen, 1996-2014
ERP & CRM - 47
Customer Management Activities
© Minder Chen, 1996-2014
ERP & CRM - 48
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The Value Chain of Electronic Commerce