Chapter 08 – Enterprise Business Systems
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8 Enterprise Business Systems
CHAPTER OVERVIEW
Chapter 8: Enterprise Business Systems outlines the goals and components of customer relationship
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
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• 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
• 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 its customers and needs
Chapter 08 – Enterprise Business Systems
KEY TERMS AND CONCEPTS
1. Customer relationship management (309):
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,
customer service, customer support, and retention and loyalty programs.
2. E-business suites (328):
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 (334):
4. Enterprise resource planning (320):
Enterprise resource planning is a cross-functional enterprise system driven by an integrated suite of
software modules that supports the basic internal business processes of a company.
a. Application components:
Components typically include modules for manufacturing, distribution, sales, accounting, and
human resources.
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5. Supply chain (330):
6. Supply chain management (330):
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,
ANSWERS TO REVIEW QUIZ
Q.
A.
Key Term
Q.
A.
Key Term
1
1
Customer relationship management
10
1c
CRM challenges
2
4
Enterprise resource planning
11
4c
ERP challenges
3
6
Supply chain management
12
6c
SCM challenges
4
1a
CRM application components
13
1d
CRM trends
5
4a
ERP application components
14
4d
ERP trends
6
6a
SCM application components
15
6d
SCM trends
7
1b
CRM benefits
16
2
E-business suites
8
4b
ERP benefits
17
3
Electronic data interchange
9
6b
SCM benefits
18
5
Supply chain
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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 Case on Dow Corning and DirecTV in the chapter. Are mobile
applications limited to be scaled-down versions of their enterprise counterparts, or will companies
start to develop enterprise applications thinking about mobile deployments? Discuss.
Mobile users are on the move. They need quick, task-oriented applications suitable for a very small
4. How could some of the spectacular failures of ERP systems have been avoided?
Recommendations:
• start early
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
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6. Refer to the Real World Case on Kennametal, Haworth, and Others in the chapter. Do the
examples discussed in the case show that customization and ERPs should never go together? Discuss.
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
Chapter 08 – Enterprise Business Systems
9. Refer to the Real World Case on Cisco Systems and Others in the chapter. Are supply chains
becoming so tightly integrated that resilience against external shocks is minimal? Discuss.
Yes. Tightened supply chains reduce margins for error. Examples abound of production lines shut
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
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
well and won‘t benefit from a new system, why spend the time and money on it? Second, the small
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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
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
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
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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.
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.
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ANSWERS TO REAL WORLD CASES
RWC 1: Dow Corning and DirecTV
Case Study Questions
1. Think about the business benefits of the mobile CRM deployments discussed in the case. How
did Dow Corning and DirecTV benefit from these applications? What can they do that was not
possible before? What were the effects on productivity?
CRM Benefits
• Work effectively
2. Use examples from the case to illustrate your answer.
Examples
• Quick links to customer data including sales by customer, open order status, and customer
complaints
3. What are some of the reasons that make it so challenging to mobilize an existing enterprise
application? How did the companies featured in the case tackle that challenge?
Technical challenges
• Accommodating very small screen sizes
• Linking the new applications to the main application (middleware)
Personnel challenges
4. Salespeople are generally known for their independence and emphasis on efficient time
management, and not always for their willingness to adopt new technologies pushed by management.
What were some of the approaches mentioned in the case that were used to foster adoption? What
other alternatives can you think of?
Motivational approaches
• Providing value to the end user
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Alternative approaches
• Carrot
these are satisfactory.
Real World Activities
1. Erik Walters of DirecTV notes that a mobile CRM platform is part of the effort in search of the
“360–degree view of the customer.” What does he mean by that? Go online and research this concept,
other companies that are embracing it, and what technologies they employ. Prepare a report to
summarize your findings.
Search
2. Both companies emphasize the many benefits accrued from their mobile CRM deployments.
Chip Reeves of Dow Corning states that the application provides their salespeople with a competitive
advantage. Do you agree with this statement? Why or why not? Break into small groups with your
classmates to discuss whether mobile CRM can provide a lasting competitive advantage.
Competitive advantage
These systems provide a competitive advantage only so long as they enable capabilities not currently
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RWC 2: 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?
Upgrades may conflict with customization. Organizations then face the choice of ditching their
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.
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
• More vendors
Chapter 08 – Enterprise Business Systems
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 3: 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:
supply chain forecasting software
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
Many business leaders are persuaded “by the numbers. These people will be most influenced by a
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RWC 4: NetSuite Inc., Berlin Packaging, Churchill Downs, and Others
Case Study Questions
1. What are the business benefits of CRM implementations for organizations such as Berlin
Packaging and Churchill Downs? What other uses of CRM would you recommend to the latter?
Provide several alternatives.
Benefits:
• a universal customer view
Alternatives:
1) The gaming industry has faced an unsympathetic public in the face of addictive gamblers suing to
recover losses. Therefore, Churchill Downs might find it useful to see if they can identify these
2. Do you agree with the idea that smaller organizations are better positioned to be more effective
users of CRM than larger ones? Why or why not? Justify your answer.
Agree. By starting “early“, organizations won’t have data conflicts and cleanup issues to sort through.
3. One of the main issues noted in the case is the importance of “good” data for the success of CRM
implementations. We discussed many of these in Chapter 5, when we compared the file processing
and database management approaches to data resource management. Which of the problems
discussed there do you see present in this case? How do CRM applications attempt to address them?
Use examples from the case to illustrate your answer.
Problems:
• data is scattered in silos across disparate systems
Chapter 08 – Enterprise Business Systems
Real World Activities
1. NetSuite Inc. is a leading provider of on-demand enterprise applications, including CRM as
Demand. Use the Internet to research all three product offerings and discover how these companies
are faring in this increasingly competitive industry. Compare and contrast their product features to
understand whether offerings are becoming differentiated or more alike as a result.
NetSuite Inc
NetSuite Inc produces integrated on-demand enterprise applications. This fits well with the trend
toward cloud computing. The company continues to grow by has not yet hit operating profitability.
2. The CRM implementations in this case highlight the critical importance of information about
customers, their preferences and activities, and how to use it to understand and develop better
marketing solutions. On the other hand, the degree to which these companies are able to target
customers individually may be of concern to some people. Break into small groups with your
classmates to discuss these concerns, as well as ways for both companies and their customers to
benefit from CRM systems, and still protect customer privacy.
Concerns:
Concerns primarily stem from privacy violations or identity theft.
Protection:
1) Privacy expectations
It is up to the organizations collecting, storing, and using the data to establish expectations.
2) Opt-in