seminar 9 - enterprise systems

8/12/2019 Seminar 9 - Enterprise Systems

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AB1401

Information Technology

Nanyang Business School AB1401 Information

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Enterprise Systems


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Agenda


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Understanding the key features of Enterprise Systems, and

The organizational benefits and challenges of using ES

The extension of ES across organizational boundaries:

Supply Chain Management Systems Customer Relationship Management System


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Enterprise Systems (ES)

Nanyang Business School AB1401 Information Technology3

Suite of integrated softwaremodules with a common centraldatabase that cover the majorfunctions within an organization

Initially designed to automateinternal back-office bizprocesses=>externally orientedand capable of communicating withcustomers and suppliers

Major functional areas include: Manufacturing and production

Procurement and logistics Finance and accounting Sale and marketing Human Resources


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Key features of an ES


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Modules integrated by a central database

Embedded, standard processes (best practices)

Limited customizability through built-in parameters

Costly to customize


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Enterprise Systems: Modules

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ERP features a set of integrated

software modules and a central

database that enables data to be

shared by biz processes and

functional areas throughout the

enterprise


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Major ES Software Vendors


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Source:

http://whatiserp.net/erp-

report/erp-market-share-and-

vendor-evaluation-2011/


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Embedded Best Practices


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Enterprise systems (aka ERP systems) are built around

predefinedbusiness processes in each of the functional areas

Eg. the steps that organizations usually take to compute payroll

Some degree of variation is allowed by the Enterprise System

package software by having the organization select from a set ofparameters.

Eg. An organization can specify whether payroll is computed based

on hourly or daily rates, or weekly or monthly salaries.


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Embedded Best Practices

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What happens when the organizations requirements cannot be

accommodated within the ES parameters? Customization of the source code

Workarounds: additional steps get around the problem. Eg. downloading data to spreadsheets for further analysis

Customization is usually discouraged because

It is costly

It can introduce errors into the system

It makes it difficult to upgrade to future versions of the ES

Degrade system performance, compromising the info and process integration

When there are customers with similar customization needs, the softwarevendor may produce an industry or country-specific version

Eg. SAP has a local HR version that reflects Singapores unique CPFcontribution scheme


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The Benefits of ES


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SAP videoon benefits (http://www.youtube.com/watch?v=9_YY6z-_rsw&feature=related)

Integration enables

Capture of data once at point of origination

Reduced data capture effort and error reduction

Automatic triggering of downstream transactions

Eg. capture of order at point of sale, triggers scheduling of shipment,

update of inventory, sales accounts,.

Access to updated information
http://www.youtube.com/watch?v=9_YY6z-_rsw&feature=relatedhttp://www.youtube.com/watch?v=9_YY6z-_rsw&feature=related


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The Benefits of ES

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MNCs use ES to promote the adoption of standard processes andstandard data definitions across their business units in multiplecountries.

Benefits: Increase efficiency due to integration, data capture at source

Standardization of processes throughout the enterprise (across differentbiz units), enabling One face to the customer. Global customers expect consistency when dealing with

the MNC, regardless of country

Scale economies through aggregation in certain functions such as global procurement inorder to get the best prices from suppliers

Reduction in cycle time (i.e. the total elapsed time from the beginning to the end of aprocess)

Allows optimization of the organizations global supply chain, as design, marketing,production, procurement, and logistics occur in different parts of the world

Provides headquarters management with timely and standardized

information (across countries) for better decision making


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Challenges of ES


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The adoption of standard processes1) Often requires significant change in the way employees work

2) The amount of training to use an ES can be substantial

These can contribute to user resistance to the system

3) Sometimes leads to inappropriate processes (eg. that do not meetthe industrys or countrys requirements), triggering inefficientworkarounds and/or lower

This triggers workarounds that undermine the hoped for benefits of the ES

In the worst cases, poorly managed implementation of ES can lead to

organizational losses Eg. Hersheys ES system led to losses during peak Halloween period

4) Increases dependence on the ES software vendor


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Extending ES Beyond the Organization


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Major ES vendors such as SAP and Oracle now offer modulesthat allow the organization to further integrate its operations

beyond its boundaries,

With suppliers: Supply Chain Management (SCM) systems

With customers: Customer Relationship Management (CRM)

systems


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Supply Chain Management (SCM)


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A supply chain comprises organizations and processes for Procuring raw materials Turning these into intermediate and finished products Distributing these to customers (often through distributors

and other intermediaries)

ES supply some integration of internal supply chain processesbut they are not designed to deal with external supply chainprocesses

The challenge in supply chain is managing the efficient flow of

goods and information so that materials and finished goods areavailable at the right place at the right time.


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Supply Chain Partners


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Information Systems and SCM

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Inefficiencies cut into a companys operating costs

Can waste up to 25% of operating costs.

Ideally, all parties in the supply chain want a just-in-timesituation,

Components arrive as needed, finished goods shipped after leavingassembly line

So that production is not halted, nor sales lost, and

Minimal inventory holding costs are incurred

This requires accurate forecasting of sales and production

However, uncertainties of shipment, quality, and customer demandprevail

Buffer stock is kept, i.e. safety stock


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Information Systems and SCM


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The bullwhip effect(http://www.youtube.com/watch?v=wLNdDSYqhNw) Where relatively small variations in demand get amplified as they

pass up the supply chain

The result is excess stockpiling of inventory to address uncertainty

about demand. SCM software can reduce the bullwhip effect by providing all

members of the supply chain with dynamic information about

Inventory levels

Sales and product forecasts

Shipments
http://www.youtube.com/watch?v=wLNdDSYqhNwhttp://www.youtube.com/watch?v=wLNdDSYqhNw


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Supply Chain Management Systems


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Supply chain planning systems

Model existing supply chain

Demand planning (one of the most important and complex function, which

determines how much product a biz needs to make to satisfy customers demands)

Optimize sourcing, manufacturing plans

Establish inventory levels

Identifying transportation modes

Supply chain execution systems

Manage flow of products through distribution centers and warehouses to ensure

that products are delivered to the right locations in the most efficient manner


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Types of Supply Chains


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Sequential supply chains

Information and materials flow sequentially from company to company

Push-based model (aka. build-to-stock)

Schedules based on forecasts or best guesses of demand, and products are

pushed to customers


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Types of Supply Chains (cont)


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Pull-based model (aka. demand-driven or build-to-order) Actual customer orders trigger events in supply chain. Transactions to produce

and deliver only what customers have ordered move up the supply chain from

retailers to distributors to manufacturers and eventually to suppliers


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Concurrent supply chains

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Concurrent supply chains

Information flows in many directions simultaneously amongmembers of a supply chain network


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Global Supply Chains and the Internet

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The internet has made it easier for supply chain partners to

connect to each other to exchange information. Eg. Fords auto exchange

(http://www.youtube.com/watch?v=qyO9QSo0FjU&feature=related)

Changed information flow from sequential to concurrent

Supply chains today are global Eg. Three quarters of electronics components manufacture is done

in Asia, largely for markets in the West

The pervasiveness of glob al supply chains and the rise of the

internet has made concurrent supply chains more attractive andfeasible
http://www.youtube.com/watch?v=qyO9QSo0FjU&feature=relatedhttp://www.youtube.com/watch?v=qyO9QSo0FjU&feature=related


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Customer Relationship Management (CRM)

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Challenges

How to know your customer in a personal way, when you are alarge corporation with thousands of customers.

Answers to questions such as Who are our most profitablecustomer? What do they want to buy? Who are potentialcustomers?

Business value of customer relationship management

Increased customer satisfaction

Reduced direct-marketing costs

More effective marketing

Lower costs for customer acquisition/retention

Increased sales revenue

Reduced churn rate (churn rate measures the number of customers whostop using or purchasing products or services from a company)


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CRM Systems


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Capture and integrate customer data from all over theorganization

Consolidate and analyze customer data

Distribute customer information to various systems and

customer touch points across enterprise

Provide single enterprise view of customers


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Customer Data Sources

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CRM captures and integrates customer data from all over the org,

consolidate and analyze the data, and distribute the results to varioussystems and customer touch points across the org. (Touch point: aka. contact point,a method to interact with customers, e.g. email, telephone )


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CRM Software: Capabilities

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Sales Force Automation

Provide salespeople (usually in the field)with customer information(including profile of past purchases), product information, sale quotegeneration

Increasingly accessible through mobile devices

Customer Service

To support call centers, helpdesks, customer support staff

Routes call to service representative, provides customer information,tracks resolution of problem

May include a web-based self service capability before routing call to

customer service representative Marketing

Tools for analyzing customer data, identifying customer segments to targetfor various promotions, for cross-selling

Data analytics (eg. use of OLAP, data mining on data warehouses)


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Operational & analytical CRM


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Operational CRM includes customer-facing app (e.g. tools forsales force automation, call center and customer service support,and marketing automation)

Analytical CRM includes app that analyze customer data generatedby operational CRM app to provide info for improving bizperformance

Identify buying patterns

Create segments for targeted marketing

Pinpoint profitable and unprofitable customers

Calculate customer lifetime value (CLTV), which is based on therelationship between the revenue produced by a specific customer,the expenses incurred in acquiring and servicing that customer, andthe expected life of the relationship


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CRM Software Capabilities


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CRM Systems


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nterprise application challenges


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Highly expensive to purchase and implement enterpriseapplications

Total cost may be 4 to 5 times the price of software

Requires fundamental changes

Technology changes Business processes changes

Organizational changes

Incurs switching costs, dependence on software vendors to

upgrade its product and maintain installation Requires data standardization, management, cleansing


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Next generation enterprise applications

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Enterprise solutions / suites:

Replacing stand-alone enterprise, CRM, SCM systems Make these applications more flexible, Web-enabled, integrated with other

systems, including mobile devices

Open-source and on-demand applications SaaS (much less popular, and not yet available from the major enterprise

vendors)

Salesforce.com and Oracle include some Web 2.0 capability to enable customersto identify new ideas

Service platform: Integrates multiple applications to deliver a seamlessexperience for all parties Order-to-cash process: a composite process that integrates data from individual

ES and legacy financial app

Portals: Integrate info from enterprise app and disparate in-house legacy systems,

presenting it to users through a Web interface

Increasingly, new services delivered through portals


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Next generation enterprise applications


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Extending ES to Mobiledevices

Examples:

SAPs mobile applications

Sybase s mobile CRM (seenext slide)

Mobile workforce

management


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seminar 9 - enterprise systems

Documents