Mid Term Exam

Chapters 1,3,4,5,6,10 & (additional readings)

Two parts:

Multiple choice (get scantron form 889 E available in book store)

Short cases

CASE: Implementing Success or Failure: It’s in the eye of the beholder Q: Two sides?

Should not have been a surprise• They knew when the semester was starting

• Project manager should know better than to underestimate the complexity of the problem

• Should know “end-users” importance from past experiences

• “Interface” issue should have been studied

• Should know never implement a system without properly testing it

• Should know never to implement a “critical” system all at once

Is it possible that some implementation problems cannot be easily foreseen or prevented? Give some examples.

• Rapid change in outside environment

• Unexpected shifts in market conditions

• Mergers & Acquisitions That were not in place during system development

What could Indiana University have done differently to prevent this unfortunate event from occurring?

Paid more attention to the following:• Lack of a “sponsor”• Lack of system “analysis”• Lack of Project Management experience, hence planning• Violated most principles of project management• Ignoring the Complexity of problem (break it into small

modules)• Implement on one campus at a time• Apparent rush to implement the system • Ignore analysts warnings• Lack of testing & Training

Is there evidence to suggest that they learned from this

experience?

It appears they learned from their mistakes.

• They were able to identify causes of failures – first step in correcting errors

What is a Business Process?

• A collection of related, structured activities--a chain of events--that produce a specific service or product for a particular customer or customers.www.gao.gov/policy/itguide/glossary.htm

• The complete response that a business makes to an event. A business process entails the execution of a sequence of one or more process steps. It has a clearly defined deliverable or outcome. www.georgetown.edu/uis/ia/dw/GLOSSARY0816.html

• A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.www.crfonline.org/orc/glossary/b.html

Ch 7

Electronic Business Systems

Learning Objectives

Identify the following cross-functional enterprise systems, and give examples of how they can provide significant business value to a company:

a. Enterprise resource planning (ERP)

b. Customer relationship management (CRM)

c. Supply chain management (SCM)

d. Enterprise application integration (EAI)

e. Transaction processing systems (TPS)

f. Enterprise collaboration systems (ECS)

Learning Objectives

2. Give examples of how Internet and other information technologies support business processes within the business functions of accounting, finance, human resource management, marketing, and production and operations management.

3. Understand the need for enterprise application integration to improve support of business interactions across multiple e-business applications.

Case 1/p235

What are the benefits and drawbacks of the OnQ system at Hilton ?

Benefits could include:– Prompt resolution of problems– Matching customers with their profiles, and thus provide personalized services

and accommodations– Supports brand and loyalty building– Differentiates customers in terms of their value to the franchise (measured in

frequency of stay, duration, revenue per customer, past complaints, etc.)Drawbacks could include:• Company could become exposed to legal issues concerning privacy rights

regarding the information it is storing and its usage• While very useful to the franchise, the OnQ system does not have a direct

impact on the bottom line and thus may be subject to questions about whether its benefits outweigh its costs

• Being custom-developed, the system requires the maintenance of a large IT staff to support and modify it, without relying on outside vendors

What does Hilton have to do to create a competitive advantage through OnQ? Provide some specific

examples.

• A competitive advantage exists when a firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). OnQ is most likely intended to produce a competitive advantage of the second kind.

Examples:• Automatic accommodation assignment (room type,

special needs, etc.) based on past experiences• Self-service check-in with prior reservation (similar to

what Hertz does with car rentals in certain programs)

Is it possible to have too much information about a customer? Explain.

For the marketing department, it is never possible to have too much information about a customer. And that is probably true at the aggregate level, i.e. for grouping or segmenting, planning and forecasting, etc.

However, at the point of contact with the customer, in this case most likely the front desk or the call center, providing too much of that information to service representatives can impede efficient and effective communication.

There are two reasons why this might happen: representatives would need to process a significant amount of data in a

very short period of time, and then, also in a very short time, decide which pieces to use to form a decision

and how. In this sense, it would be better to provide representatives with a distilled set of facts that would directly enhance their decision making rather than flood them with all the available data.

Cross Functional Enterprise Systems

Focus on supporting integrated clusters of business processes involved in operations of an organization

Re-engineering business processes across functions, customers and suppliers

Suppliers

Customers

Em

plo

yees

Par

tner

s

Supply Chain ManagementSourcing - Procurement

Enterprise Resource PlanningInternal Business Processes

Customer Relationship ManagementMarketing – Sales - Service

Kn

owle

dge

Man

agem

ent

Col

labo

rati

on –

Dec

isio

n S

uppo

rt

Par

tner

Rel

atio

nshi

p M

anag

emen

tSe

llin

g –

Dis

trib

utio

n

Enterprise Application ArchitectureEnterprise Application Architecture

Enterprise Business Systems

CRM – Business Focus

CRM is an organization-wide strategy to manage customer experience and perception.

CRM requires a customer-centric business philosophy and culture to support effective marketing, sales and service processes.

CRM

‘Customer’ represents the intended group organization serves.

‘Relationship,’ the most important term, represents the level of trust organization forms with its intended customers.

‘Management,’ represents the effort organizations put forth to support the ‘Customer Relationship.

Supports an Integrated and Supports an Integrated and Collaborative Relationship Between Collaborative Relationship Between a Business and it’s Customersa Business and it’s Customers

CRM: The Business Focus

CustomerLife Cycle

CRMFunctionalSolutions

CRMIntegratedSolution

The Internet

Acquire Enhance Retain

Direct Marketing Cross-sell and Up-sell Proactive Service

Sales Force Automation Customer Support

CollaborativeService

SharedCustomer Data

Partner Company Customer

CRM Uses IT to Create a Cross-CRM Uses IT to Create a Cross-Functional Enterprise SystemFunctional Enterprise System

CRM: The Business Focus

Marketing andFulfillment Customer

Service andSupport

Retentionand LoyaltyProgramsContact and

AccountManagement

Sales•Cross-Sell•Up-Sell

Prospect orEmployee

Fax e-Mail

Telephone Web

CRM: The Business FocusBenefits and Challenges of CRMBenefits and Challenges of CRM• Identify and Target the Best Customers• Customization and Personalization of

Products and Services• Track Customer Contacts

CRM FailuresCRM Failures• 50% of Applications Fail to Meet

Expectations• 20% of the Time CRM Damaged

Customer Relationships• Lack of Understanding and Preparation

is Blamed

INTUIT

How can CRM support Intuit during this tax season?

CRM Integrated Solution? (Page 241)

PartnerIRS

Bank

Company

Intuit

Customer:

Tax payers

ERP – Business Backbone

E EnterpriseR ResourcesP Planning

ERP is ENTERPRISE

ERP software attempts to integrate all departments and functions across a company onto a single computer system that can serve all those departments’ particular needs.

ProductionPlanning Integrated

Logistics

Accounting and FinanceHuman

Resources

Sales,Distribution,

OrderManagement

Customer/Employee

Enterprise Resource Planning

The Technological Backbone of The Technological Backbone of e-Businesse-Business

Su

pp

liers

Human ResourcesFinance and Accounting

DemandPlanning

Manufacturing Planning

LogisticsPlanning

DistributionPlanning

OrderEntry

Enterprise Resource Planning

Cu

stom

ers

Purchasing& Accounts

Payable

MRPInbound

InventoryPlant Mgmt.

Manufacturing& Production

Scheduling

InventoryControl &

Warehousing

Distribution& AccountsReceivable

Enterprise Resource Planning

The Business Value of ERPThe Business Value of ERP

Benefits of ERPBenefits of ERP• Quality and Efficiency

• Decreased Costs

• Decision Support

• Enterprise Agility

Failures in ERP Do ExistFailures in ERP Do Exist

Enterprise Resource Planning

Causes of ERP Failures Causes of ERP Failures

• Underestimating the Complexity of Planning, Development, and Training Needed

• Failure to Involve Affected Employees

• Trying to do Too Much Too Fast• Over Reliance by Company on

Claims of Software Companies

Enterprise Resource Planning

SCM –Business Backbone

It is the art & science that goes into improving the way your company finds raw components it needs to make a product or service and deliver it to customers

Five Components of SCM:

1. PLAN (Strategic Part)2. SOURCE (Choose Supplier)3. MAKE (Manufacturing Step)4. DELIVER (Logistics) 5. RETURN ( Return/Support Customers)

SCM Software Helps Firms Reengineer and SCM Software Helps Firms Reengineer and Integrate The Functional SCM ProcessesIntegrate The Functional SCM Processes

Supply ChainLife Cycle

SCMFunctionalProcesses

SCMIntegratedSolution

Supplier Manufacturer CustomerRetailer

The Internet

CollaborativeFulfillment

SharedMarket Data

Commit Schedule Make Deliver

Strategic Sourcingand Procurement

Forecast and Demand Planning

Customer Order Fulfillment Service

Distribution Network and Warehouse Operations

Transportation and ShipmentManagement

ProductionLogistics

SCM: The Business Network

SCM: The Business Network

Supply Chain Management : aSupply Chain Management : a top strategic objective for many top strategic objective for many firms firms

• The Right Products• The Right Place• The Right Time• In the Proper Quantity• At an Acceptable Cost

Business Value GoalsRapid Demand Fulfillment

Collaborative SupplyChain Planning and

Execution

Customer Value GoalsGive customers what theywant, when and how theywant it, at the lowest cost

InterenterpriseCoordination of

Manufacturing andBusiness Process

EffectiveDistribution and

Channel Partnerships

Responsiveness andAccountabilityto Customers

Objectives of Supply Chain Objectives of Supply Chain ManagementManagement

SCM: The Business Network

Value Chain Example

Define SCM for producing pork products

Pork Industry

A value chain in the pork industry might include: • an input supplier (of food, housing, veterinary care, etc.) • the farmer or producer (to raise and market the animals) • the packing plant (for primal cuts) • the fabrication plant (for portion cuts) • the food service distributor who gets the product to

wholesalers and other markets • the consumer who buys the pork chop or pork roast

VALUE CHAIN

SCM: The Business Network

Objective of SCM Efficiently Objective of SCM Efficiently Manages this Process by: Manages this Process by:

• Forecasting Demand• Controlling Inventory• Enhancing Business

Relationships• Receiving Feedback and Status

of Every Link of the Chain

Benefits and Challenges of Benefits and Challenges of SCMSCM

SCM: The Business Network

• Lack of Proper Planning

Knowledge, Tools, and Guidelines

• Inaccurate Demand Forecasts• Lack of Adequate

Collaboration• Software Itself Immature

Question: SCMWhen supply chain relationships are reviewed for

streamlining, longtime supply chain partners may no longer be viable. Then the organization must decide between:– preserving a longstanding relationship with a supply

chain partner and sacrificing the benefits of a more rational process,

– or terminating a longtime relationship in favor of a more beneficial supply chain.

Discuss the pros and cons of this decision.– What criteria should an organization use in

determining the appropriate action with regard to longstanding supply chain partners?

QuestionCriteria for partnerships:

- Accuracy (251, 317)- Seamless integration (253)- Efficiency (245)- Ease of use/Fexibility (245)- Quality (245)- Predictability/Dependability- Compatibility/Risk

PROPros of Preserving - Already established relationship (mutual understanding and agreements)- Ease of ordering - Supply chain's knowledge of your business and its processes

CONS of Preserving - Stuck in a rut (not as obvious to see changes needed/more efficient processes)

Question?

What’s the relationship between ERP & SCM?

Enterprise Application Integration

EAI Software Connects Major e-Business Applications Like CRM and ERPEAI Software Connects Major e-Business Applications Like CRM and ERP

Front-OfficeCRM ApplicationsCustomer Service

Field ServiceProduct Configuration

Sales Order Entry

Back-OfficeERP Applications

DistributionManufacturing

SchedulingFinance

EnterpriseApplicationIntegration

EAI

Functional Systems

CIM

SFA (sales force automation)

FMS (Financial Management Systems)

AIS (Accounting Information Systems)

HRM - BQ list

TPS (transaction Processing Systems)

MIS and Transaction Processing MIS and Transaction Processing SystemsSystems

Management activity Management activity subsystemssubsystems

Transaction processing, operations

strategic

tactical

operational

STRATEGIC PLANNING

MANAGEMENT

CONTROL

OPERATIONAL

CONTROL

Transaction Processing SystemsTransaction Processing Systems

transactions

data capture

processing

reporting

updating

Data Capture (or Entry)Data Capture (or Entry)

• data transcription– source documents– turnaround documents

• data inscription– optically scanned– MICR

• on-line data entry– no source document

• EDI - Electronic Data Interchange

System flowcharting symbolsSystem flowcharting symbols

document or report

terminal keyboard

terminal display

DASD, disk

magnetic tapes

process, program

manual process

on-page connector

off-page connector

Transaction processing stepsTransaction processing steps1. Data Capture

2. Edit Transaction

3. Updating

4. Reporting

Batch TPSBatch TPStransaction

data entry

edit

errors

update

reports

detail

detail masterapplica-tion

On-line TPSOn-line TPS

reports

applica-tion

errors

master

log file

entry &process

Hilton Case/ P 236

What are the benefits and drawbacks of the OnQ system at Hilton?

Benefits could include:– Prompt resolution of problems– Matching customers with their profiles, and thus provide personalized services and

accommodations– Supports brand and loyalty building– Differentiates customers in terms of their value to the franchise (measured in frequency of

stay, duration, revenue per customer, past complaints, etc.)

Drawbacks could include:• Company could become exposed to legal issues concerning privacy rights regarding the

information it is storing and its usage• While very useful to the franchise, the OnQ system does not have a direct impact on the

bottom line and thus may be subject to questions about whether its benefits outweigh its costs

• Being custom-developed, the system requires the maintenance of a large IT staff to support and modify it, without relying on outside vendors

What does Hilton have to do to create a competitive advantage through OnQ? Provide some specific examples.

A competitive advantage exists when a firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). OnQ is most likely intended to produce a competitive advantage of the second kind.

Examples• Automatic accommodation assignment (room type, special

needs, etc.) based on past experiences• Self-service check-in with prior reservation (similar to

what Hertz does with car rentals in certain programs)

Is it possible to have too much information about

a customer? Explain.

For the marketing department, it is never possible to have too much information about a customer. And that is probably true at the aggregate level, i.e. for grouping or segmenting, planning and forecasting,

Front line worker ex: front desk or the call center, providing too much of that information to service representatives can impede efficient and effective communication.

Representatives would need to process a significant amount of data in a very short period of time

Decide which pieces to use to form a decision and how.

Why has EAI recently “become a critical part of the IT strategy at many organizations,” and a high-ranking project of top IT executives?

• The need to meld disparate systems together such as the integration of front- and back-office applications.

• The need to quickly deliver data to employees, customers and partners. Corporate Express needed to dramatically improve customer service.

• The need for complex corporations such as Baxter International and General Electric Co. to connect the independent operations of various business units.

• To reduce costs internally as well as for its customers.

Additional Readings

• ERP

• SCM

• CRM

• EAI