Chapter 8

Business Across the Enterprise

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Getting All the Geese Lined Up: Managing at the Enterprise Business Level

Customer Relationship Management, Enterprise Resource Planning, and Supply Chain Management all share the same Goal: to get the organization to line up and head in the same direction (like geese).

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II. What Is CRM?

Providing the organization with a single complete view of every customer, and providing the customer with a single complete view of the organization and its extended channels

CRM helps identify and reward the best customers

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II. CRM Features Sales – providing software tools and data sources to

manage sales activities, and optimize cross-selling and up-selling

Cross-selling – selling related products to current customersUp-selling – selling better products than the one currently

purchasedMarketing and Fulfillment – automate direct marketing,

scheduling, and tracking, and assist in scheduling responses and requests, while capturing relevant information for the marketing database

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II. CRM Features

Customer Service and Support – provide customer service software tools, and real-time access to the customer database

Call Center Software – routes calls to customer support agents

Help Desk Software – provides assistance for customer service agents having problems with a product/service

Contact and Account Management – capture and track relevant data about past and planned contacts

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II. CRM Features Retention and Loyalty Programs – enhancing and

optimizing customer retention and loyalty is a major business strategy because:It costs 6 times more to sell a new customer than an existing

oneDissatisfied customers will tell 8–10 people about bad

experiencesA firm can boost sales 85% by increasing customer retention 5%Odds of selling a new customer – 15%; Odds of selling a current

customer – 50%If a firm resolves a service problem quickly, 70% of complaining

customers will do business with the firm again

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III. The Three Phases of CRM

Acquire – CRM helps a new customer perceive value of a superior product/service

Enhance – CRM supports superior customer service, and cross-selling/up-selling

Retain – CRM helps proactively identify and reward the most loyal and profitable customers

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V. CRM Failures

Although over 70% of firms plan to implement CRM, over 50% of CRM projects fail to produce promised results due to:

Lack of senior management sponsorshipImproper change managementProjects take on too much too fastPoor integration between CRM and core business

systemsLack of end-user incentives leading to low user

adoption rates

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VI. Trends in CRM

Firms must create tighter linkages with customers while enhancing the customer experienceOperational CRM – supports/synchronizes

customer interactionsAnalytical CRM – extracts customer information

and predicts customer behaviorCollaborative CRM – enables collaboration with

customers, suppliers, and business partnersPortal-Based CRM – enables access to customer

information and CRM tools

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ERPERP is a multifunctional enterprisewide

backbone that integrates/automates business processes and information systems

What is ERP?

A cross-functional software suite supporting basic internal business processes of a firm

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III. Benefits and Challenges of ERP

Major Business Value from ERP

Quality and Efficiency – significant improvements in quality and efficiency of customer service, production, and distribution

Decreased Costs – significant reductions in transaction costs, hardware and software, and IT support staff

Decision Support – provides cross-functional information that enables better decision making across the enterprise

Enterprise Agility – breaks down departmental/functional walls and enables more flexible, adaptive organizational structures

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III. Benefits and Challenges of ERP

Costs of ERP – if you do not do ERP properly you can kill the firm

Causes of ERP Failures#1 cause – underestimating the complexity of

planning, development, and training necessary for success

Failure to involve affected employeesTrying to do too much too fastOverreliance on claims of software

vendors/consulting firms

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IV. Trends in ERP

Improvements in Integration and Flexibility – ERP modules have become more flexible and easier to install

Extensions to Business Applications – access to intranets/extranets

Broader Reach to New Users – use of the Internet, intranets and extranets provides new links to customers, suppliers, and partners

Adoption of Internet Technologies –enables all the above

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I. What is SCM?

A cross-functional interenterprise system using IT to support/manage links between key business processes and suppliers, customers, and business partnersElectronic Data Interchange (EDI) – an early SCM

methodology for exchanging information between partners using standard document message formats, still very popular but being replaced by .xml-based Web services

SCM optimizes the effective/efficient movement of materials between suppliers, customers, and other partners

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III. Benefits and Challenges of SCM

SCM solutions are becoming more complex

Benefits:

Faster, More Accurate Order ProcessingReductions in Inventory LevelsQuicker Times to MarketLower Transaction and Materials CostsStrategic Relationships with Suppliers

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III. Benefits and Challenges of SCM

Challenges – SCM Failures Caused By:

Lack of Knowledge about Demand PlanningInaccurate/Overly Optimistic Demand ForecastsInaccurate Production, Inventory, and Other

Business DataLack of Adequate Collaboration Among Marketing,

Production, and Inventory Management Departments

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IV. Trends in SCM

3 Stages to SCM ImplementationImprove Internal Supply Chain Processes

and Improve Relationships with Suppliers and Customers

Use Supply Chain Software, Intranets, and Extranets with Trading Partners

Develop and Implement Collaborative SCM Applications

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Rolling IT Out:Facilitating IT-enabled Change

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Management is faced with two conflicting situations…

• We must implement all necessary change• We must resist all unnecessary change

• These pose a Management Challenge and paradox

• How can we get employees to embrace necessary change?

• How can we create an environment that allows rational resistance?

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Moving Through The Really Treacherous Iceberg Prone Waters...

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Rolling IT out!

• 40% of ERP projects fail• Why do they fail?• Why do they succeed?

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What’s the worst plan you’ve seen in dealing with

change???

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The Navigational Guides

• Assess• Anticipate

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Star G

azing o

r…

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Pattern Recognition

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Assessing the Organization• Leadership style• Use of and sharing of information• Decision-making styles• Performance standards/expectations• Consequences of failure• Communication patterns• Norms/behaviors• Stories, traditions, myths, heroes• Space/layout• Symbols

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CRISES

AgeAgeYOUNGYOUNG MATUREMATURE

EXISTENCEEXISTENCE EARLYEARLY

GROWTHGROWTHMATURITYMATURITY HARVESTHARVEST

CONTROLCONTROL

AUTONOMYAUTONOMY

LEADERSHIPLEADERSHIP

RED TAPERED TAPE

STAGESTAGE

SURVIVALSURVIVAL

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Taking a Merlin view . . .

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A View From the FutureA View From the Future

““Ah yes.” Merlin said, “How did I know to Ah yes.” Merlin said, “How did I know to

set breakfast for two?... Now ordinary set breakfast for two?... Now ordinary

people are born forwards in time, if you people are born forwards in time, if you

understand what I mean, and nearly understand what I mean, and nearly

everything in the world goes forward too. everything in the world goes forward too.

This makes it quite easy for ordinary This makes it quite easy for ordinary

people to live... But unfortunately I was people to live... But unfortunately I was

born at the wrong end of time, and I have born at the wrong end of time, and I have

to live backwards from in front, while to live backwards from in front, while

surrounded by a lot of people living surrounded by a lot of people living

forward from behind...”forward from behind...”Source: Smith, C.E. Source: Smith, C.E. “The Merlin Factor”“The Merlin Factor”..

THE MERLIN FACTORTHE MERLIN FACTOR

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Transition

• Predictable Crisis– Culture Change– Confusion/Ambiguous Roles– Changing Power/Influence– Self Directedness vs. Control– Reward Structure– Lack of Clarity

Old EnterpriseOld Enterprise New EnterpriseNew Enterprise

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Navigational Guide

Creating the Blueprints…The Plan

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Initial strategy development• Top management support - Conditions for

success (including resources) have been identified, committed to, and initiated

• Communication plan created for the transformation

• Measurements for the change process and outcome have been determined

• Strategy to create shared vision has been developed

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Initial strategy development (cont’d)

• Current change plans have been assessed for they will impact employees

• Course correction strategy developed• Temporary rewards for supporting the

change process have been designed• Temporary change support structures,

policies, systems, and roles have been designed

• External expertise (use of consultants)

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Navigational Guide

Identify the Potential “Fatal Flaws” in the Plan before Leaving the Dock

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Thinkin

g outsi

de the box

Connect the nine Connect the nine stars using only four stars using only four

straight lines and straight lines and never lifting your never lifting your

pen!pen!

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outside th

e box

Thinki

ng

Thinki

ng

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Implementing the Plan

• Management of expectations• Best people full-time on project• Business process re-engineering• Minimal customization • Information and access security• User participation• Interdepartmental co-operation and

communication

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Implementing the Plan (cont’d)

• Effective communications• Presence of champion• Monitoring and evaluating of performance• Software development testing and

troubleshooting• Vendor / customer partnership• Use of vendor development tools(Adapted from “Critical Success Factors for

Implementing ERP System” by Teau Hai Mi)

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Involving the Users

• Town Meetings• Name That Project

– $100 gift certificate to local upscale restaurant

• User Teams• Solicit Input

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Written Communications• Newsletters• Project Website

– Information and documentation

• Project Listserve– General project information

• Group Emails

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Presentations and Demonstrations

• “About the Project” presentations• Why are we doing this? • How does this affect you?• What are we doing to avoid failure?• How can we all be involved?• Where can we find information about the project and

the system?

• Product demonstrations• Pep Talk

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Training

• Class Designs• Student and Instructor Manuals• Class Materials• Web Learning Assistant

– On-Line Help

• Web-Based Training– Interactive, simulation-type training– On-demand

(Modify each of these based on branding)

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Training (cont’d)

• Designed and developed course materials using purchased materials as base– Purchased materials geared more toward

centralized operations• Progressive approach (Know what the users

need!)– Beginners / Overviews– Intermediate– Advanced

• Sandbox (playtime) Database– Mirrored classroom training database– Refreshed daily

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Navigational Guide

• Keep a Ready Eye to the Horizon…Watch how the implementation isprogressing

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The Reference Point

““Planning is Planning is more important more important than the plan”than the plan”

General Dwight General Dwight EisenhowerEisenhower

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A large boat moving its rudder and slowly changing direction versus…

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a lone whitewater kayaker might shoot the rapids of a river, dodging obstacles by

instinct and quick reflexes

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Why Understand User Resistance?

• At the root of many enterprise software project failures

• Still a significant amount of user resistance even after nine months of ERP integration testing

• Resistance was the second most important contributor to time and budget overruns and was the fourth most important barrier to SAP implementation

• Users’ resistance can cause ES implementation failures

• Low ES return on investments is because of resistance

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• You gradually wear down resisters. Eventually everyone will embrace change.

• Change is a one-time thing. Once we make the changes we need, everything will be OK.

• They are employees, they should just get on board

• Others have to change, not me. • It’s really not that big of a change• This isn’t personal• We don’t have to involve them• We will figure it out as we go

Common Myths

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1. “I don’t want to.” (the block)2. “Tell me exactly what you want me to do.” (the

rollover)3. “I’ll get on it first thing next week.” (the stall)4. “Wow, what a great deal!” (the reverse)5. “I think that the change would be better if it were first

implemented in X’s division/department.” (the sidestep)

6. “X isn’t going to like this.” (projected threat)7. “You owe me one.” (the press)8. “See what you’re making me do.” (the guilt trip)9. “But we’ve always done it the other way.” (the

tradition)

How would you respond…

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People Matter!!!

• The problem of reengineering…• What value do we place on others?• Fix yourself first – others follow.

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It’s not enough to say employees need to change. Management also

needs to change!