II Information Systems Technology Ross Malaga 9 "Part II Using Information Systems" Copyright © 2005 Prentice Hall, Inc. 9-1 USING INFORMATION SYSTEMS

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Copyright © 2005 Prentice Hall, Inc.

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Information Systems TechnologyRoss Malaga

9

"Part II Using Information Systems"

USING INFORMATIONSYSTEMS FOR BUSINESS

INTEGRATION


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LEARNING GOALS• Describe the need for business integration.• Explain how organizations can use information systems to

integrate supply chains.• Describe how enterprise resource planning systems integrate

internal business processes.• Describe how businesses can use customer relationship

management systems to improve the customer experience.• Explain the risks involved in implementing integrated systems

and how they can be overcome.• Discuss the problems associated with integrating information

systems on a global basis.

9-3Copyright © 2005 Prentice Hall, Inc.

Business Integration at the Bead Bar

• Expansion and growth generate increased need for integration.– Finance– Sales– Purchasing

• Meredith – Needs an overall view of the business• Suzanne – Needs help managing the increased complexity of

additional studios’ personnel, budgets, and inventory• Leda – Needs to improve interaction with franchises• Mitch – Needs to manage more sales people entering new

markets• Julia – Needs increased functionality in the financial software• Miriam – Wants to know information systems can be used to

keep in better contact with their increasing customer base.


Business Integration at the Bead Bar (continued)

• Rachel – E-business and growth of locations means increased need to manage inventories and order fulfillment

• Jim – Growth means we need a better way to handle job candidates, employee benefits, and employee reviews


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Business Process Integration• Many business processes have their own computer systems

and do not share data in a timely and effective manner.• Even enterprise systems need to be coordinated

– Supply chain management (SCM) – provide a direct electronic connection with suppliers

– Enterprise resource planning (ERP) – integrate all the internal processes through a common information system

– Customer relationship management (CRM) – information system to manage all the functions that deal with customers

– Ensure that SCM, ERP, and CRM have the right hardware, databases, and networks


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Supply Chain Management (SCM)

• Stages of SCM– Planning – develop and implement processes that

attempt to forecast demand for products and services– Sourcing – determine who should supply the items

required– Production – make the product

• Schedule production• Ensure raw materials are on hand when needed

– Product delivery (logistics) • Everything from receiving a customer inquiry to invoicing• Warehouse management is one very important factor

– Returns – returns of raw materials as well as finished goods


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Electronic Data Interchange (EDI)

• The direct computer-to-computer transfer of business documents in electronic form– Eliminates paperwork– Reduces errors– Speeds supply process

• A key aspect of supply chain management• Allows companies to streamline their operations by

sharing more data with companies in their supply chain

• EDI relies on a pair of standards– ANSI X12 – used in North America– EDIFACT – international, but widely used in Europe


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The Need for Internal Communications

• For SCM to work, internal processes must work

• Heavy requirement for internal communications


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Integrating Internal Processeswith ERP

• ERP systems integrate all the functions and departments within an organization through a common information system

• Most common modules for an ERP system– Finance– Manufacturing– Human resources– Procurement– Customer relationship management

• ERP software can be customized to keep critical business processes


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Factors in ERP System Success

• Active support of upper management

• Having the best people on the implementation team

• Limiting customization

• Managing the time line well

• Soliciting user involvement


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Integrating with CRM

• 80/20 rule• CRM system manages all the ways an organization

interacts with customers• Goal of CRM is to increase sales and repeat business

by learning the customer– Remember the customer’s needs and preferences

– Determine the customer’s satisfaction with service

– Determine which customers are in the magic 20 percent (or have the potential to become part of it)

http://retailindustry.about.com/library/terms/p/bld_pareto.htm


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Integrating with CRM

• Although IT is a core piece of an overall CRM strategy, it should not be the only piece.

• CRM software modules include– Personalization– Marketing automation– Sales force automation– Service and support


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CRM Module Functions

• Personalization– One-to-one marketing through personalized products and

services– Amazon.com

• Marketing automation– Determine market segments– Planning and implementing campaigns– Analyzing results– Segment customers

• Demographics• Past purchases• Preferred method of shopping

http://www.amazon.com/


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CRM Module Functions (continued)

• Sales force automation – Managing contacts and leads by storing customers’

basic demographic data– Provide to-do lists and calendars– Recognize early customer trends– Forecasts of future sales

• Service and support – After-sales support– Complaint resolution– Returns


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Implementing Integrated Systems

• Cost varies– Which modules are selected– How much customization is required– Average cost is $15M – Payback period of 31 months

• Application Service Providers (ASPs)– Leases expensive resources to company on a per user or

per month basis– ASPs help reduce the risk of projects such as ERP and

CRM


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Global Integration• A global information system spans more than one

country• Challenges of global systems

– Technical standards – e.g. from country to country, vast differences may exist in information technology infrastructure

– Legal issues – e.g. laws that limit what data can transfer across international borders

– Financial and accounting standards – e.g. handle local standards and report to HQ in a different format

– Cultural differences – e.g. how do customers like to pay for goods – credit card, check, cash, other


Bead Bar Consultant

• How Integration Issues Affect the Bead Bar– Meredith – Cost versus functionality of ERP systems– Suzanne – Should it be ERP? Or CRM? Both have

advantages and disadvantages– Leda – Likes vertical market integration to ensure

franchisees so not purchase supplies elsewhere– Mitch – Sales force automation would greatly improve

management of the sales force– Julia – SCM helps to reduce inventory costs whereas ERP

financials would produce financial statements more quickly


Bead Bar Consultant (continued)

– Miriam – Wants CRM to manage marketing campaigns

– Rachel – SCM or ERP procurement module to manage inventory and costs

– Jim – ERP human resources module would improve management of HR processes


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Learning Goals Summary

In this chapter you have learned: The need for business integration How organizations can use information systems to integrate

supply chains How enterprise resource planning systems integrate internal

business processes How businesses can use customer relationship management

systems to improve the customer experience The risks involved in implementing integrated systems and

how they can be overcome The problems associated with integrating information

systems on a global basis

Documents

II Information Systems Technology Ross Malaga 9 "Part II Using Information Systems" Copyright © 2005 Prentice Hall, Inc. 9-1 USING INFORMATION SYSTEMS