Information Systems Strategy

Chapter 4
ENTERPRISE INFORMATION
SYSTEM
ORGANIZATION
 Organized into different functional areas such as:

 Marketing & sales

 Supply Chain Management (SCM)

 Accounting & Finance

 Human Resource

 Interrelated areas that needs to be combined

=> Enterprise systems / enterprise wide system

Enterprise system
 IS that allows companies to integrate information across

departments

 Central repository & common user interface

 Enables sharing of information according to needs

 Can be extended to support customer service

Enterprise system
 Also can be extended to include business activities that occur

outside organization.

 Find innovative ways to increase on-time shipment, minimize

costs, increase customer satisfaction, increase profit.

 Has variety of features and functionalities

 How to choose ?
Enterprise System – how to choose?
1. Support business process
eg: billing

- to reduce usage of paper & labor costs

- managers – keep track of billing information

Enterprise System – how to choose?
1. Supports business process

Order
Fulfillment Shipping
Entry

Packing Invoice
Order
List

Business Information
Activity
Enterprise System – how to choose?
2. Internally focused system
 Support functional areas, business processes & decision
making within an organization.

3. Externally focused system

 Coordinate business processes with customers, suppliers,
business partners etc.
 Also called inter-organizational system (IOS)
Enterprise system – how to choose?
2. Internally focused system

C
O Inbound Operations & Outbound Marketing Customer
R logistics Manufacturing logistics & Sales Service
E

S Administration
U
P Firm Infrastructure
P
Human Resources
O
R Technology Development
T
Procurement
Enterprise System – how to choose?
3. Externally focused system

Shipping Receiving

Invoice Inventory

Supplier Customer
Business Information
Activity
IS for organizations
 2 types

 Packaged application

 s/w program written by 3rd party vendor for many different users /

organizations
 Eg : Ms.Money, MYOB

 Custom application

 s/w program developed for specific organization

Business Process Management (BPM)
 Systematic, structured improvement approach by

all / part of an organization whereby people

critically examine, rethink and redesign business
process in order to achieve dramatic improvements
in one / more performance measures such as
quality, cycle time or cost.
Business Process Management (BPM)
1. Develop vision (specific objectives such as reducing costs,
shortening time to market, improving quality of
product\services).

2. Identify the critical processes that need to be redesigned.

3. Understand and measure the existing processes as a

baseline for future improvements.
Business Process Management (BPM)
4. Identify ways that information systems can be used to
improve processes.

5. Design and implement a prototype of the new processes.

Business Process Management (BPM)
 Similar to TQM or continuous process improvement

 Difference is that BPM is continuous process improvements

that :
 Focuses on incremental change

 Gradual improvement of processes

 BPM – radical redesign & drastic improvement of processes

For successful (BPM)
 Support by senior management

 Shared vision by all organizational members

 Realistic expectations

 Participants empowered to make changes

 The right people participating

 Sound management practices

 Appropriate funding
Enterprise Systems
 3 most popular forms of enterprise system

 ERP (Enterprise Resource Planning)

 CRM (Customer Resource Management)

 SCM ( Supply Chain Management)

Enterprise Systems
1. ERP
 applications that integrate business activities across

departmental boundaries
 Easy to access information using central repository

 Shared : inbound logistics & operations personel

 Different features but same interface eg: Ms.Word & Ms.Excel.

Enterprise Systems
1. ERP
 packaged software

 Choose modules carefully

 Issues:

 ERP control – how & who going to control

 ERP Business Requirements – which modules to implement

ERP Module
 Core components:

1. Financial Management
 Support accounting, financial reporting, performance
management etc.

2. Operations Management
 Components to simplify, standardize & automate business
process to improve collaboration & decision making.
ERP Module
 Core components:

3. Human Resource Management

 Components to support employee recruitment, assignment
tracking, performance reviews, payroll & regulatory
requirements etc.
ERP Module
 Extended components:

 Support the primary external activities for dealing with

suppliers & customers

 CRM & SCM
CRM - Introduction
 Customers – very valuable and important

 Repeat customers

 Customer satisfaction

 Research : cost for trying to get back old customer is 50 -100

% more than trying to keep a current customer happy.

CRM - Introduction
 Thus very important to develop and maintain customer

satisfaction by:
 Widen : attracting new customers

 Lengthen : keeping existing profitable customers satisfied

 Deepen : transforming minor customers into profitable

customers.
CRM
 Create & maintain lasting relationship with customer through

the use of reliable system, processes & procedures.

 Packaged application

 Can be integrated with ERP

Benefits of CRM system
 Enables 24/7/365 operation

 Web based interfaces provide product info, sales status, support

info, tracking etc.

 Individualized service

 Tailored to each customer eg: language

 Improved information

 Integrated information –marketing, sales & service

Benefits of CRM system
 Speeds problem identification / resolution

 Improved record keeping& efficient methods of capturing customer

complaints help to identify and solve problems faster.

 Speeds process

 Removes information handoffs, speeding sales & support processes.

 Improved Integration

 Information from CRM integrated with other systems to streamline

business process.
Benefits of CRM system
 Improved product development

 Tracking customer behavior to identify future opportunities for

product & service offerings.

 Improved planning

 Managing & scheduling sales follow-ups to assess satisfaction,

repurchase probabilities, time frames and frequencies.

Developing CRM Strategy
 Policy & business process change

 Organizational policies & procedures need to reflect a customer

focused culture.

 Customer service change

 Customer focused measures for quality & satisfaction

Developing CRM Strategy
 Employee training change

 Train all marketing, sales & support staff

 Have customer focus

 Data collection, analysis & sharing change

CRM
 3 primary components

1. Operational CRM (front office)

 Direct interaction with customers
 Sales
 Customer service & support
CRM
2. Analytical CRM (back office)
 Data warehouses
 Data mining

3. Collaborative CRM
 Communicate between CRM & people
SCM
 Supply chain consists of supplies that company uses (eg: raw

materials & components)

 4 types of SC planning:

 Demand planning & forecasting

 Distribution planning

 Production scheduling

 Procurement planning
Formula for ES success
 Recommendations:

 Secure executive sponsorship

 Get help from experts

 Thoroughly train users

 Take a multidisciplinary approach

 Look beyond ERP

END OF CHAPTER 4