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8 Business Across the Enterprise
CHAPTER OVERVIEW
Chapter 8: Business Across the Enterprise outlines the goals and components of customer relationship
management, enterprise resource planning, and supply chain management, and discusses the benefits and
challenges of these major enterprise applications.
LEARNING OBJECTIVES
After reading and studying this chapter, you should be able to:
1. Identify and give examples to illustrate the following aspects of customer relationship management,
enterprise resource management, and supply chain management systems:
2. Understand the importance of managing at the enterprise level to achieve maximum efficiencies and
benefits.
SUMMARY
• Customer Relationship Management: The Business Focus. Customer relationship management is a
cross-functional 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. CRM systems use
• Enterprise Resource Planning: The Business Backbone. Enterprise resource planning is a cross–
functional 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
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• 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
KEY TERMS AND CONCEPTS
1. Customer relationship management ():
CRM uses information technology to create a cross-functional 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.
a. Application components:
CRM components include contact and account management, sales, marketing, fulfilment,
2. E-business suites ():
E-business suites integrate ERP, customer relationship management, supply chain management,
procurement, decision support, enterprise portals, health care functionality, and other business
applications and functions.
3. Electronic data interchange ():
4. Enterprise resource planning ():
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a. Application components:
Components typically include modules for manufacturing, distribution, sales, accounting, and
human resources.
b. Business benefits:
5. Supply chain ():
A supply chain consists of the network of business relationships required to get an organization’s
products from concept to market.
6. Supply chain management ():
is a cross-functional interenterprise system that uses information technology to help support and
manage the links between some of a company’s key business processes and those of its suppliers,
customers, and business partners.
a. Application components:
Application components include procurement, forecasting, fulfilment, distribution, production,
and transportation.
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ANSWERS TO REVIEW QUIZ
Q.
A.
Key Term
Q.
A.
Key Term
1
Customer relationship management
10
CRM challenges
2
Enterprise resource planning
11
ERP challenges
3
Supply chain management
12
SCM challenges
4
CRM application components
13
CRM trends
5
ERP application components
14
ERP trends
6
SCM application components
15
SCM trends
7
CRM benefits
16
E-business suites
8
ERP benefits
17
Electronic data interchange
9
SCM benefits
18
Supply chain
ANSWERS TO DISCUSSION QUESTIONS
1. Should every company become a customer-focused business? Why or why not?
Yes. Customers have faster, cheaper, and more reliable access to information than they have ever had
2. Why would systems that enhance a company’s relationships with customers have such a high
rate of failure?
Reasons for failure
• Complexity integrating data
3. Refer to the Real World Challenge introduced at the beginning of this chapter. Is the main
problem that the Jelly Belly Candy Company faces a lack of reliable information, or is it
something else? How important is it to obtain an accurate diagnostic of the situation before
throwing technology at it?
The main problem at Jelly Belly does appear to be lack of reliable customer information. Their
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4. How could some of the spectacular failures of ERP systems have been avoided?
Recommendations:
• start early
• clean up data first
5. Should companies continue to use EDI systems? Why or why not?
First, keep in mind that XML is a modern subset of EDI. Next, students might interpret this question
as one of whether or not to continue exchanging data within the supply chain. If so, then the answer
reduces to a matter one of a cost/benefit analysis with results varying by example.
6. Refer to the Real World Solution in the chapter. The company’s first attempt at implementing a
CRM package was not successful. What was done differently the second time that resulted in a
better experience? What lessons can be drawn from these two projects?
From the case it would appear that the first CRM system, while supposedly “compatible” with their
existing ERP system, was not as compatible as was hoped. Many things did not work or were more
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7. How can the problem of overenthusiastic demand forecasts in supply chain planning be avoided?
Recommendations:
• shorten the inventory reorder cycle
8. What challenges do you see for a company that wants to implement collaborative SCM systems?
How would you meet such challenges?
Challenges:
• connecting to an ever increasing number of partners
• partners may not be ready to connect
9. Refer to the Real World Case on Kennametal, Haworth, Dana Holding, and Others in the
chapter. Do the examples discussed in the case show that customization and ERPs should never
go together? Discuss.
10. Should companies install e-business software suites or “best of breed” e-business software
components? Why?
E-business suites provide benefits from integrated data and give managers a more complete view of
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option must be weighed before making the decision on which to adopt.
ANSWERS TO ANALYSIS EXERCISES
1. NetSuite’s NetSuite
a. Identify and explore NetSuite’s components that relate to your business major.
b. Click on the “Customers” link on NetSuite’s home page and select a customer in an industry that
interests you (or one assigned by your instructor). Read the customer’s success story. What
benefits were emphasized?
Answers should include a summary of challenges and results obtained. Vendor “case studies” are
c. Would you recommend this suite to a small business owner? Why or why not?
Instructors should emphasize three important aspects to this type of recommendation. As a minimum,
the marginal benefit of the new system should exceed the marginal cost. That is, if a business is doing
2. Collaborative CRM
a. How do these property transactions differ from commodity supply chain transactions?
Real estate transactions significantly differ based on type and circumstances unique to each property
b. What advantage do the real estate company and the law firm gain by adopting their client’s
technology platform (Lotus Notes/Domino)?
While the client can better monitor their vendor’s performance, the vendor has the ability to measure
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c. Find a Lotus Notes/Domino product review on the Web, read it, and report your findings to the
class. Your presentation should answer the following questions: Who provided the review? What
is the reviewer’s relationship to the product? What did the reviewer like? What did the reviewer
dislike? What competitors were mentioned in the review? How did Lotus Notes/Domino
compare?
Students should discover that Lotus Notes/Domino systems are built on a proprietary, cross platform
3. Enterprise Sales Support
Note: The first three questions in this exercise can be answered independently from each other. Each
question focuses on a separate set of skills: Formatting, functions, logic operations, and pivot tables.
a. Pending sales need Christina’s immediate attention. Help her spot these opportunities by
automatically highlighting them. Select the “Sales Leads” spreadsheet and use Excel’s
Conditional Formatting feature to set the cell shading color of each Status cell (Life, Auto, Home,
Health) to green if the status is “Sale” (S) and red if the status is “Pending” (P).
See Data Solutions Disk for the completed exercise. This task illustrates how dynamic formatting
b. Select the “Cover Sheet” spreadsheet. In cell C2, use the COUNTA function to count the total
number of sales leads in the Sales Leads sheet. In cells C5 through C8, use the COUNTIF
function to count the number of sales made for each type of insurance. In cells D5 through D8,
divide the sales made by the number of leads to calculate the percentage of sales. Write these
formulas so they calculate the correct answers even when Christina later adds more records to
the list. Which product has the highest sales rate?
See Data Solutions Disk for the completed exercise. This task exposes students to cross-sheet
c. When rating the quality of her information, Christina counts whether or not a lead resulted in at
least one sale. Using the IF and the OR functions, write a formula that will display “1” when at
least one sale was made to a lead and “0” if the lead generated no sales.
See Data Solutions Disk for the completed exercise. Excel logic functions can produce extremely
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d. Ultimately, Christina needs to know which lead source results in the most sales. Create a pivot
table to average the data in the “Sales” for each “Source.” Format this result as a percentage.
Because a 1 indicates at least one sale and a 0 indicates no sales, the average per source indicates
each source’s closing rate. Which source had the highest closing rate? Which source had the
lowest closing rate?
See Data Solutions Disk for the completed exercise. Pivot tables put number crunching power in the
4. The Future of Enterprise Systems
Note: This exercise helps students better appreciate the large array of software available to support
ERP initiatives in a variety of organizations.
5. Customer Relations Gone Awry
a. What could Mai Wing have done differently?
Obviously Mai could have maintained her accounts with Megabank regardless of the fees. With her
b. Was Mai the sort of customer Megabank would want to keep?
Mai is a well-educated, hard-working professional moving up in her career and likely to need more
c. Were Megabank’s policies sound? Why or why not?
This answer requires some estimation of Megabank’s reasoning for providing free checking. More than
likely, Megabank found the free checking policy for Mai’s former employer a good way to attract
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d. Clearly Mai Wing was the sort of customer Megabank would want to keep. Is Megabanks’
information systems department or its marketing managers to blame?
Clearly Megabank’s computer system shouldn’t have flagged Mai Wing’s account for increased fees.
ANSWERS TO REAL WORLD CHALLENGE/SOLUTION
Real World Challenge
1. What is (are) the problem(s), that management at the Jelly belly Candy Company is trying to
solve? What would be the consequences of they are left unaddressed? Are these problems
important to the future of the company?
Problem
2. What are the information needs of sales managers at the Jelly Belly Candy Company that are
not being satisfied? What is preventing the company from doing so? Why was this not a problem
before?
Sales managers’ information needs
• who are the best and worst sales performers
3. Assume that you work for the Fully Belly Candy Company as a sales manager and you have
access to all of the data you could want. What would you ask for? How would you use that data?
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Data wish list
• business intelligence: competitor’s product, pricing, promotions, customers
Real World Solution
1. What can managers at Jelly Belly Candy Company do now that they could not do before? What
has changed to make that possible? Do they have more data, better processes, both?
New capabilities
• ensure all leads are followed up in a timely manner
2. Managers at the Jelly Belly Candy Company have started to look at what else can they do to
improve sales now that the lack of access to necessary information is no longer an issue. What
could they be doing with their new setup? What three new initiatives would you consider
implementing?
Potential new initiatives (answers will vary)
• trend analysis and forecasting
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ANSWERS TO REAL WORLD CASES
RWC 1: Kennametal, Haworth, Dana Holding, and Others
Case Study Questions
1. Why does ERP customization lead to so many headaches when it is time to upgrade?
2. Why were the systems customized in the first place?
3. Cutting payments outright to ERP vendors may not be possible for smaller companies without
the in-house resources that larger organizations have. Are they at the mercy of the software
providers? What other alternatives do small companies have? Provide some recommendations.
Yes.
Alternatives
4. Kennametal CIO complains that they “paid maintenance for nothing.” Who do you think is
responsible for that state of affairs? Kennametal? The ERP vendor? Both? Justify your answer.
Kennametal
The calculus isn’t complicated, and either Kennametal’s project manager failed to anticipate or
Real World Activities
1. What offerings are available in the ERP marketplace today that were not available when the
companies mentioned in the case first started investing in the technology? What new
functionality do these offerings have? Research current ERP alternatives and prepare a report
comparing their major features.
A search on “what’s new in ERP” (including quotes) will turn up useful information.
Ten year summary
Chapter 08 – Business Across the Enterprise
2. Should companies scrape their existing ERP implementations and start from scratch again, or
should they keep trying to make their existing investments pay off? What are the advantages and
disadvantages of each approach? Break into small groups to discuss these issues.
Keep – advantages
• Stable, mature system: no business disruption
• No massive capital investments
RWC 2: Cisco Systems, Black & Decker, and O’Reilly Auto Parts
Case Study Questions
1. Cisco Systems went from a “push” to a “pull” approach to its supply chain after the dot-com
debacle. How are these two approaches different? Does it depend on the state of the economy
which one should be used? Why?
Push
The push system relies on demand forecasting to determine production schedules. Forecast models
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2. What are the different elements that need to come together to bring supply chains to the optimal
levels needed by these companies? What role does IT play?
Required elements
• Marketing
3. How are the approaches to inventory management taken by O’Reilly Auto Parts, on one hand,
and Cisco Systems and Black & Decker, on the other, different?
O’Reilly’s approach
The car parts industry is counter-cyclical. This means that when the economy takes a prolonged
Real World Activities
1. The ability to accurately forecast demand is one of the major issues involved in the efforts
discussed in the case. Go online and research which technologies companies are employing today
to improve this aspect of their supply chains. Prepare a presentation to share your findings with
the rest of your class.
Search terms:
2. The case compares short-term tactical needs with long-term strategic investments. How do you
make the case, in an economic downturn, for the continued need to invest in technology? Break
into small groups and brainstorm some alternatives.
Two approaches
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