Chapter 7

Chapter Summary

Cross-Functional Enterprise Systems. Major e-business applications and their interrelationships are summarized in the enterprise application architecture of Figure 7.3. These applications are integrated crossfunctional enterprise applications such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM). These systems themselves are frequently being interconnected by enterprise application integration (EAI) systems so that the business users of these applications can more easily access the information resources they need to support the needs of customers, suppliers, and business partners. Enterprise collaboration systems (ECS) are cross-functional systems that support and enhance communication and collaboration among the teams and workgroups in an organization. Refer to Figures 7.10 and 7.14 for summary views of the e-business applications in EAI systems and enterprise collaboration systems.
Enterprise Resource Planning: The BusinessBackbone. Enterprise resource planning is a crossfunctional enterprise system that integrates and automates many of the internal business processes of a company, particularly those within the manufacturing, logistics, distribution, accounting, finance, and human resource functions of the business. Thus, ERP serves as the vital backbone information system of the enterprise, helping a company achieve the efficiency, agility, and responsiveness required to succeed in a dynamic business environment. ERP software typically consists of integrated modules that give a company a real-time crossfunctional view of its core business processes, such as production, order processing, and sales, and its resources, such as cash, raw materials, production capacity, and people. However, properly implementing ERP systems is a difficult and costly process that has caused serious business losses for some companies, who underestimated the planning, development, and training that were necessary to reengineer their business processes to accommodate their new ERP systems.
Customer Relationship Management: The BusinessFocus. Customer relationship management is a crossfunctional enterprise system that integrates and automates many of the customer serving processes in sales, marketing, and customer services that interact with a company's customers. The major application components of CRM include contact and account management, sales, marketing and fulfillment, customer service and support, and retention and loyalty programs, all aimed at helping a company acquire, enhance, and retain profitable relationships with its customers as a primary business goal. However, many companies have found CRM systems difficult to properly implement due to lack of adequate understanding and preparation by management and affected employees.
Supply Chain Management: The Business Network. Supply chain management is a cross-functional interenterprise system that integrates and automates the network of business processes and relationships between a company and its suppliers, customers, distributors, and other business partners. The goal of SCM is to help a company achieve agility and responsiveness in meeting the demands of their customers and needs of their suppliers, by enabling it to design, build, and sell its products using a fast, efficient, and low-cost network of business partners, processes, and relationships, or supply chain. SCM is frequently subdivided into supply chain planning applications, such as demand and supply forecasting, and supply chain execution applications, such as inventory management, logistics management, and warehouse management. Developing effective supply chain systems and achieving the business goals of SCM have proven to be complex and difficult challenges for many firms.
Transaction Processing Systems. Online transaction processing systems play a vital role in business. Transaction processing involves the basic activities of (1) data entry, (2) transaction processing, (3) database maintenance, (4) document and report generation, and (5) inquiry processing. Many firms are using the Internet, intranets, extranets, and other networks for online transaction processing to provide superior service to their customers and suppliers. Figure 7.13 illustrates the basic activities of transaction processing systems.
Functional Business Systems. Functional business information systems support the business functions of marketing, production/operations, accounting, finance, and human resource management through a variety of e-business operational and management information systems summarized in Figure 7.17.
Marketing. Marketing information systems support traditional and e-commerce processes and management of the marketing function. Major types of marketing information systems include interactive marketing at e-commerce websites, sales force automation, customer relationship management, sales management, product management, targeted marketing, advertising and promotion, and market research. Thus, marketing information systems assist marketing managers in electronic commerce product development and customer relationship decisions, as well as in planning advertising and sales promotion strategies and developing the e-commerce potential of new and present products, and new channels of distribution.
Manufacturing. Computer-based manufacturing information systems help a company achieve computerintegrated manufacturing (CIM), and thus simplify, automate, and integrate many of the activities needed to quickly produce high-quality products to meet changing customer demands. For example, computer-aided design using collaborative manufacturing networks helps engineers collaborate on the design of new products and processes. Then manufacturing resource planning systems help plan the types of resources needed in the production process. Finally, manufacturing execution systems monitor and control the manufacture of products on the factory floor through shop floor scheduling and control systems, controlling a physical process (process control), a machine tool (numerical control), or machines with some humanlike work capabilities (robotics).
Human Resource Management. Human resource information systems support human resource management in organizations. They include information systems for staffing the organization, training and development, and compensation administration. HRM websites on the Internet or corporate intranets have become important tools for providing HR services to present and prospective employees.
Accounting and Finance. Accounting information systems record, report, and analyze business transactions and events for the management of the business enterprise. Examples of common accounting information systems include order processing, inventory control, accounts receivable, accounts payable, payroll, and general ledger systems. Information systems in finance support financial managers in decisions regarding the financing of a business and the allocation of financial resources within a business. Financial information systems include cash management, online investment management, capital budgeting, and financial forecasting and planning.

Chapter 7: Electronic Business Systems

1. Refer to the Real World Case on Salesforce.com and Others in the chapter. What are several reasons why a business application on IT like CRM can be so costly and take so long to implement for many companies and be criticized as a “most oversold, under-implemented concept”?

Reasons would include:

· Lack of planning (preparing for the implementation of CRM).

· Lack of training of users (employees, customers and business partners)

· Vendors use scores of consultants to get the CRM up and running.

· The company has failed to develop the changes in the business processes necessary for CRM to be successful.

2. Why would systems like CRM which enhance a company’s relationships with its customers have such a high rate of failure?

Reasons for a high rate of failure could include:

· No amount of high-level cooperation will protect a CRM project from rank-and-file employees that hate it due to fear the software would threaten their jobs.

· CRM is complex to install because it often touches many different legacy systems.

· A CRM system may prove to be very slow for customers and employees if not designed and implemented right.

· Poor project planning and training with little stakeholder involvement.

3. How could some of the spectacular failures of ERP systems in business been avoided?

Failures could be avoided by:

· Stakeholder involvement in the CRM project from the beginning.

· Adequate training of employees, customers and others that will be using the system including the re-training of employees with redefined job tasks.

· Effective CRM project planning, design and testing of the system to insure that issues such as stakeholder acceptance and system speed are managed successfully.

4. Refer to the example of Dell Computer in the chapter. What other solutions could there be for the problem of information system incompatibility in business besides EAI systems?

The lack of integration means that companies aren’t getting the seamless processing that would enable them to reduce costs and speeds up customer responsiveness. This is true whether you are talking about Dell Computer or any other company dependent on integrated systems. Dell Computer chose the WebMethods’ enterprise application integration (EAI) technology as a solution to their challenge of integrating a variety of software packages from a number of companies that they deal with. This technology acts as a software translator and creates a kind of hub that, using the Web, allows instantaneous communication among networked companies’ internal business systems.

Dell could have chosen to develop their own in-house system or outsourced the contracting of a new system that their clients would buy into. They could also pursue such things as joint ventures, strategic alliances, licensing, etc. for a new system.

5. Refer to the example on Charles Schwab & Co. in the chapter. What are the most important HR applications a company should offer to its employees via a Web-based system? Why?

The most important HR applications that a company should offer to its employees via a Web-based system are by giving employees access to information that they need. The HR department can do this by ensuring that employees can easily find applicable information without spending a tremendous amount of time looking for it. Applications can include a multitude of things such as benefits, training, opportunities for advancement or career growth, scheduling of time, sick and dental benefits and forms, travel and hotel directives, learning centers and many other things.

6. How could sales force automation affect salesperson productivity, marketing management, and competitive advantage?

Sales force automation is the use of computers to automate sales recording and reporting by sales people as well as communications and sales support. It improves productivity by saving time otherwise spent on manual creation of records, reports, and presentations; it improves communications and accessibility to information to support sales activities; and it may help in planning sales tactics.

Increasingly, computers and networks are providing the basis for sales force automation. In many companies, the sales force is being outfitted with notebook computers that connect them to Web browsers, and sales contact management software that connect them to marketing websites on the Internet, extranets, and their company intranets. Sales force automation has resulted in increasing the personal productivity of salespeople, dramatically speed up the capture and analysis of sales data from the field to marketing managers at company headquarters, allows marketing and sales management to improve the delivery of information and the support they provide to their salespeople. Many companies view sales force automation as a way to gain a strategic advantage in sales productivity and marketing responsiveness.

7. How can Internet technologies be involved in improving a process in one of the functions of business? Choose one example and evaluate its business value.

Students’ answers will vary. However, it will be relatively easy for them to choose from any of the various functions of business such as accounting, marketing, manufacturing, retailing, etc. For this answer, the accounting function will be given. For example, aaccounting information systems are being affected by Internet and client/server technologies. Using the Internet, intranets, extranets, and other network changes how accounting information systems monitor and track business activity. The online, interactive nature of such networks calls for new forms of transaction documents, procedures, and controls. Many companies are using or developing network links to their trading partners through the use of the Internet or other networks for applications such as order processing, inventory control, accounts receivable, and accounts payable. These advances in the accounting function have to vast improvements in the capturing, reporting, and the accuracy of company data. Thus, real-time processing of accounting information enables executives to make better and more informed decisions involving their firm’s resources.

7. Refer to the Real World Case on GE Power and Corporate Express in the chapter. Why is there a need for enterprise application integration systems in business? Will this continue to be the case in the future? Why or why not?

Enterprise application integration systems are needed for the following reasons:

· It is a critical part of the IT strategy in organizations looking to meld disparate systems and quickly deliver data to employees, customers and partners.

· Companies continue to have a need to integrate front- and back-office applications, Web services and legacy applications.

· The ability to send data in real-time from one system to another.

· The need to improve the quality and accuracy of the company’s data.

· The need to cut costs both internally and for customers, so a company will remain attractive as a preferred supplier.

· The need to integrate various application with enterprise resource planning systems.

9. What are several e-business applications that you might recommend to a small company to help it survive and succeed in challenging economic times? Why?

e-business applications may take on many forms. For example data conferencing, digital information services, distance learning, facsimile, intranets, teleconferencing, videoconferencing, voice mail systems etc. It may also take on the form of applications dealing with procurement, marketing, manufacturing, financial, logistics, human resources, supplier and vendor integration applications and a multitude of other applications. What is important in the question is that a small company can use e-business applications to survive and succeed in challenging economic times by allowing it to carry out many functions more effectively. As well, as large corporations restructure and go back to concentrating on their core business there are a number of opportunities for small businesses to provide services to the larger companies.

10. Refer to the example on General Electric in the chapter. How do enterprise collaboration systems contribute to bottom-line profits for a business?

There is a growing organizational need to integrate functions and business processes to improve organizational control, coordination, and responsiveness by allowing data and information to flow more freely between different parts of the organization. Poorly integrated applications can create costly inefficiencies or slow customer service and become competitive liabilities. Enterprise collaboration system software consists of a set of interdependent modules for applications such as sales and distribution, financial accounting, investment management, materials management, production planning, plant maintenance, and human resources that allows data to be used by multiple functions and business processes for more precise organizational coordination and control. The modules can communicate with each other directly or by sharing a common repository of data. Vendors are rapidly enhancing their products to provide more capabilities for supply chain management, customer relationship management, and exchange of data with other enterprises. As such, these systems can greatly enhance the bottom-line profits for a business who knows how to use them effectively.