Fifth Lecture by AhsanTareen



Integrating Functions and
   Business Processes:
    CRM, SCM and ES
• Organizations are using information systems to
  coordinate activities and decisions across entire
  firms and even entire industries. Information
  systems for customer relationship management
  (CRM) and supply chain management (SCM)
  can help coordinate processes that span
  multiple business functions, including those
  shared with customers and other supply chain
  partners. Enterprise systems can automate the
  flow of information across business processes
  throughout the entire organization.
• business processes
   – flows of work and activities
   – Business processes refer to the manner in which work is organized,
     coordinated, and focused to produce a valuable product or service

• New trends:
   – automating parts of these processes
   – rethink and streamline these processes

• Note:
   – One of the most important strategic decisions that a firm can make is
     not deciding how to use computers to improve business processes, but
     instead to first understand what business processes need improvement
     (Keen, 1997)
   – When systems are used to strengthen the wrong business model or
     business processes, the business can become more efficient at doing
     what it should not do
Although each of the major business functions has its own set of business
processes, many other business processes are cross-functional, transcending
the boundaries between sales, marketing, manufacturing, and research and
development. These cross-functional processes cut across the traditional
organizational structure, grouping employees from different functional
specialties to complete a piece of work
         Customer Relationship
• Electronic commerce, global competition, and
  the rise of digital firms have made companies
  think strategically about their business
  processes for managing their relationships with
  customers and suppliers
• Companies need to give more value (utility,
  price and convenience) at lower cost
• The old concept: Compartmentalization
• Solution: improved business processes with IS
• Instead of treating customers as exploitable sources of income,
  businesses are now viewing them as long-term assets to be
  nurtured through customer relationship management.

• CRM is both a business and technology discipline that uses
  information systems to coordinate all of the business processes
  surrounding the firm's interactions with its customers in sales,
  marketing, and service.

• The ideal CRM system provides end-to-end customer care from
  receipt of an order through product delivery and service.

• CRM tools try to solve this problem by integrating the firm's
  customer-related processes and consolidating customer information
  from multiple communication channels—telephone, e-mail, wireless
  devices, or the Web—so that the firm can present one coherent face
  to the customer
• What is the value of a particular customer to the firm over his or her
  lifetime? Who are our most loyal customers? (It costs six times more
  to sell to a new customer than to an existing customer [Kalakota and
  Robinson, 2001].) Who are our most profitable customers?
  (Typically 80 to 90 percent of a firm's profits are generated by 10 to
  20 percent of its customers.) What do these profitable customers
  want to buy?
     Supply Chain Management

• Objective:
  – To deliver the product more rapidly to the customer
    and lower costs
• Supply chain management is the close linkage
  and coordination of activities involved in buying,
  making, and moving a product. It integrates
  supplier, manufacturer, distributor, and customer
  logistics processes to reduce time, redundant
  effort, and inventory costs.
• Information systems make supply chain
  management more efficient by helping
  companies coordinate, schedule, and
  control procurement, production, inventory
  management, and delivery of products and
  services. Supply chain management
  systems can be built using intranets,
  extranets, or special supply chain
  management software

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