SEMINAR – ENTERPRISE APPLICATIONS

Enterprise Applications

 Understand the need for Enterprise Resource Planning

(ERP) Systems (GBI Case Study)
 Understand the business value of ERP systems
 Key Features of ERP systems
 ERP Implementation (ERP in the Cloud)
 Customer Relationship Management System (CRM)
Readings
 Chapter 9 (textbook)
 Cases posted on Blackboard
 GBI Case Study
 Owens Corning Case Study (optinal)
 Articles posted on Blackboard
 ERP in the Cloud Article
 Oracle-ERP Analytics Article
 Enterprise Resource Planning Systems
(ERP System)
4

 Suite of integrated software modules that cover the

major functions within an organization
 Major functional areas:
 Manufacturing and production
 Procurement and logistics
 Finance and accounting
 Sale and marketing
 Human Resources
Functional Areas, Business
Functions
Business Processes
Key Premise #1: Functional Areas

 Functional areas are interdependent

 Each requires data from the others
 Better integration of functional areas leads to
improvements in communication, workflow, and
operational efficiency of the organization
Key Premise #2: Business Processes

 “A business process or business method is a

collection of related, structured activities that
produce a specific service or product for a
particular customer or customers.”

 Business Processes span functional areas and thus

go across functional boundaries.
 Global Bikes Inc. (GBI) Case Study
Objectives
 Understand functional units are interdependent
 Sales – Sales Manager, Sales Staff, Sales Order Clerk
 Logistics (Warehouse & Shipping) – Logistics Manager
 Finance – AR Manager, AR Clerk
 Understand business processes span functional areas
 Credit Application
Sales Quotation
 Sales Order Entry
 Warehouse and Shipping
 Billing
 Payment
 Understand GBI IT Infrastructure - IT systems used by various
functional units
 Purpose of system, type of data stored
 What problems were faced by GBI and what were these due to?
 Problems with GBI’s Sales Process:
Reasons & Impact

Inefficient Business Processes



Ad-hoc and inefficient procedures cause delays, mistakes,

misunderstandings, and affects customer/employee relationships

Multiple Stand-alone systems



No data sharing

Causes delays, decrease in operational efficiency, customer relationships problems
Maintenance – upgrades, backup, recovery etc.

Data not available in real time (frequency of data entry and updates –


batch processing)
Sales quotation, customer credit limit, invoices, payments entered in
batches
Delayed decision making, wrong decisions, customer and employee relationship problems
GBI Needs New System
 If you were part of the GBI’s IT team who was
sourcing for a new system, what system
features would be on your wish list?
 Enterprise Resource Planning Systems (ERP)
14

 Suite of integrated
software modules with
a common central
database that cover the
major functions within
an organization
Class Discussion: Business Value of ERP Systems

 What benefits would GBI obtain by

implementing an ERP system?
 The Benefits of ERP Systems
17

 Data Integration
 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,….
 Improvement in workflow
 Access to updated and real-time information
 Improve external customer communications
 Better communication can improve customer relationships and sales.

 Operational Efficiency
 ERP eliminates redundant efforts and duplicated data; can generate
savings in operations expense
Business Processes supported by ERP
Systems
 Embedded “Best Practices”
20

 Enterprise systems are built around predefined

business processes that reflect the best practices

 What happens when the ERP package can’t

meet the requirements of the organization?
 Implementation Strategy:
Package Configuration
21

 Some degree of variation is allowed by the Enterprise System

package software by having the organization modify the
parameters defined in configuration tables.
 Eg. An organization can specify whether payroll is computed based
on hourly or daily rates, or weekly or monthly salaries.
 An organization can specify whether revenue is recognized by
product line, geographical unit or distribution channel.

 What happens when the organization’s requirements cannot

be accommodated within the ERP parameters i.e. through
the package configuration?
 Implementation Strategies
22

 Implement with Package Modification

 Modify the source code (generally called customization)- usually
discouraged. Why?
 Modify Configuration Tables (Configuring the software)

 Implement without any customization

 Redesign organization’s business processes to adapt to the process embedded
in the package
 “Workarounds”: additional steps get around the problem without modifying
the package.
 Why customization is
23
discouraged?
 Customization of the source code - usually discouraged. Why?
 It is costly
 It can introduce errors in the system (if not built according to customer
requirements), involves rework; may impact the project schedule (project may
not be completed on time; project may get cancelled)
 With too much customization, the system starts to resemble the legacy system
and the organization may lose the benefits of best practices in the ERP software
 System may become complex and difficult to use by users
 It makes it difficult to upgrade to future versions of software

 When there are customers with similar customization needs, the software
vendor may produce an industry or country-specific version
 Eg. SAP has a local HR version that reflects Singapore’s unique CPF
contribution scheme
Effects of Source Code Customisation on Costs
 Workaround Example

The hospital needed numerous reports for reporting to

government or for internal performance monitoring.

Problem: The ERP system did not generate these reports.

Solution: ERP vendor extracted necessary data from ERP

system into 40 over flat files, which was imported into
relational database software for users to manipulate data
and create reports
 Challenges of ERP Systems
27

 Increased dependence on the software vendor

 Higher switching costs

 High cost and cost overruns

 training
 testing and integration
 database conversion

 Disruptions to operations
 ERP implementations usually requires re-engineering business processes for better
alignment with ERP software
 expect major changes in business processes – requires significant change in the way employees work

 Opposition to Change
 User Reluctance and Inertia. Why?
 Need of upper management support
 Change Management
 Key challenge is not in managing technology, but in
managing people
 ERP system changes how people work
 To be effective, change may have to be dramatic
 Business processes that are more effective require fewer
people
 Some employees may be eliminated from their current
jobs
 Class Discussion: ERP in the
Cloud
 What is a cloud-based ERP system? How is it
different from “on-premises” or “in-house”
system?
 What are the benefits and limitations of

cloud-based ERP systems?

 Is cloud-based ERP system a good choice for

GBI? Why or Why not?

 ERP Analytics
 Analytics extend the value of ERP
 ERP systems collect transaction data from the various functions across
the enterprise in a common database
 Analytic tools provide ability to analyze the data for patterns to enable
prediction and optimization
 Some examples:
 HR: Learning management, Pay-performance, Recruitment performance
 Finance: Receivables and Payables analysis, budgetary control
 Supply: Supplier performance, Procurement analytics (bottlenecks, cycle time,
…)
 Sales: Customer profitability
 And Management dashboards that bring multiple indicators together
 Refer to Oracle-ERP Analytics document for details
 ERP Review
 What are some of the key features of an Enterprise
System? Explain how these features contribute to
the organizational benefits and challenges of using
an Enterprise System?
(November/December 2011, Exam Question)
 Extending ES Beyond the Organization
34

 Major ERP vendors such as Suppliers

SAP and Oracle now offer
modules to link to: Supply Chain Management
Sourcing - Procurement
 Suppliers:
 SupplyChain Management
(SCM) systems Enterprise Resource Planning
Internal Business Processes
 Customers
 Customer
Relationship
Customer Relationship Management
Management (CRM) systems Marketing – Sales - Service

Customers
 Customer Relationship Management (CRM)
35

 How to “know” your customer in a personal way,

when you are a large corporation with thousands of
customers?

 Customer Relationship Management (CRM) Systems

 Capture and integrate customer data from all over the
organization
 Consolidate and analyze customer data
 Distribute customer information to various systems and
customer touch points across enterprise
 Provide single enterprise view of customers
CRM Data Sources

 CRM systems examine

customers from a
multifaceted
perspective. These
systems use a set of
integrated applications
to address all aspects of
the customer
relationship, including
customer service, sales,
and marketing.
CRM Features
 CRM packages typically include tools for:
 Sales force automation (SFA)
 E.g.
sales prospect and contact information, and sales quote
generation capabilities
 Customer service
 E.g.
assigning and managing customer service requests;
Web-based self-service capabilities
 Marketing
 E.g.capturing prospect and customer data, scheduling and
tracking direct-marketing mailings or e-mail
 CRM Software Capabilities

 The major CRM

software products
support business
processes in sales,
service, and
marketing,
integrating customer
information from
many different
sources.
Types of CRM Software
 Operational CRM:
 Customer-facing applications
 E.g.sales force automation, call center and customer
service support, and marketing automation
 Analytical CRM:
 Analyze customer data generated by operational CRM
applications to improve business performance
 Based on data warehouses populated by operational
CRM systems and customer touch points
 Analytical CRM System
40
Of Beer and Diapers
Benefits of CRM Systems
 Business value of CRM
 Increased customer satisfaction
 More effective marketing
 Lower costs for customer acquisition/retention
 Increased sales revenue
 Reduce churn rate
 Number of customers who stop using or purchasing
products or services from a company.
 Indicator of growth or decline of firm’s customer base
Group Discussion
 Describe two ways in which a bank could use a
Customer Relationship Management system to
improve its relationship with its customers, increase
its sales, and profitability.
(November/December 2011, Exam Question)
Enterprise Applications – Summary
and Trends
 Enterprise Applications Summary
45

 Highly expensive to purchase and implement

enterprise applications
 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
 Requires data conversion (data standardization,
management, cleansing)
 Enterprise Applications Trends
46

 Enterprise Suites:
 Move is to make applications more flexible, Web-enabled, integrated with other
systems
 Enterprise suites - SAP Business Suite
 Software to enable CRM, SCM, and enterprise systems work together and
with suppliers and client systems
 Utilize Web services, SOA

SAP PLM
SD FI
MM CO SAP SAP SAP
PP SRM CRM
AM ECC
SAP R/3
Client/Server
QM ABAP PS SAP SCM
PM Basis
WF
HR IS SAP NetWeaver
 Enterprise Applications Trends, cont.
47

 Open-source and on-demand applications

 SaaS, Salesforce.com (leader in hosted CRM solutions)

 Extending ES to Mobile devices

 SAP’s mobile applications

 Sybase’ s mobile CRM

 Web 2.0 capabilities

 Salesforce.com enables subscribers to submit and discuss
new ideas
 Dell encourages its customers to suggest and vote on new
concepts and feature changes in Dell products