Enterprise Relationship Management

We are...

• Bret Anderson• Mark Aspelin• Clark Bickley• Mary K. Broecker

• Mahesh Hotchandani• Jun Shi• Dan Taylor• Xiao Yue

Agenda

• Project Statement

• Current State of ERM

• Value Proposition

• Implementation Strategy

Project Statement

• Objective

– Recommend to Dell how to leverage the internet to improve strategic relationships

• Project Scope

– Investigate industry best practices

– Determine ERM feasibility and identify implementation issues

• Methodology

– Researched publicly available information from external sources

Enterprise Relationship Management

• ERM is the management and development of strategic relationships using internet tools and technology

• ERM attempts to tighten supplier partnership by sharing strategic information

• ERM attempts to launch better products faster by providing a medium for companies to collaborate

CommunicationCommerce

Collaboration

ERM

Business to Business Internet Use

ERM Examples• Cisco

– Goals of expanding the Internet-enabled supply chain to include web-based repositories that track the performance of suppliers

– “Suppliers that have poor performance on certain tasks could lose business”

• Marshall Industries– Extranet lets suppliers and customers access

backlog, contract pricing, design registration and sales info.

– MACRO link uses intranets and data warehousing to link engineering, forecasting, production

ERM Examples (cont’d)

• Xilinx: Posts changes in production specs.• Snap-On-Tools: Check inventory and news groups• Ryder: Non-financial EDI & common forms• Lockheed: Meeting minutes, baseline documents,

contracts and schedules• IBM: Procurement info. and newsletter• Siemens: Manage potential suppliers who want to

do business

What’s the Competition Doing?

• IBM, Compaq, HP– Unprecedented cooperation to squeeze out cost

and time from channel• “…not just channel assembly… not just re-

engineered supply chain… but building relationships that never existed.”

– Rosetta Net• IT industry standards for supply chain management

functions over the internet

What are Dell’s Suppliers Doing?

• Channel partner info, password protected– Intel Channel, Toshiba

• EDI and procurement info, password protected– Micron

• Well-searchable engineering info, user customizable– TI

• Evaluation of 30 suppliers Internet use available http://grok.bus.utexas.edu/dptaylor/matrix.asp

What’s the Value Proposition?

• Effectively manage supplier partnership:– Information sharing– Collaborative work environment

• Aligned with Dell’s internet strategy

• Benefit for Dell and suppliers

Function Benefit To Dell Benefit To SupplierAutomatic datatransmission

Cutting out paper andclerical costs

Cutting out paper andclerical costs

Sharing demand forecasts Share of cost savings Inventory cost savingsProvide communicationschannel between Dell’scustomers and suppliers

Increased customersatisfaction

Obtain info on what thecustomer really wants in amore timely fashion

Sharing of real-time datafrom QBR metrics

Enhance relationship withsuppliers

Supplier can move closer tocontinuous vice quarterlyimprovement model

Automatic datatransmission

Managers can focus onvalue-added activities

Suppliers can focus onvalue-added activities

Automatic datatransmission

Obtain supplier roadmapsmore easily - Facilitatemfg/planning process

Obtain Dell roadmaps moreeasily - Facilitatemfg/planning process

Automatic datatransmission

Scalability - increasetransactions withoutincreasing resources

Scalability – increasetransactions withoutincreasing resources

Information available viaweb

The people who want andneed information are morelikely to get it

The people who want andneed information are morelikely to get it

Project ROI Analysis

• The need for ROI analysis

• Challenges to traditional ROI analysis

• The “intangible” approach to ROI

• Alternative approaches

• Other project factors

Major ROI Components

• Tangible benefits:– Business process operational improvements– Decreased time to place orders with suppliers– Increased suppliers handled by each employee– Decreased cost of supplies

Major ROI Components

• Intangible benefits:– Better supplier satisfaction– Increased internal IT skills– Quick response to supplier preferences– Support Dell’s business goals

Major ROI Components

• Tangible cost/risk:– Increased IT costs– Internal training costs– Supplier training and support– Business process reengineering– Cost of security measures

Major ROI Components

• Intangible cost/risk:– Employee resistance to change– Pointers to competitors– Supplier resistance to change– “One-upmanship” of web features and sites

Culture

Technology&

Processes

Strategy(Vision)

ERM

Implementation

• Consider interdependence of culture, strategy, and technology

• Leverage experience

• Solicit support from partners

• Develop a security model for system

Information Culture• Internet-enabled ERM challenges Dell's

information culture– Information as an asset to be protected vs. as a

strategic investment

• Building relationships on a need to know basis in an information rich environment– Trust is key to success– Improve upon current communication channels– Responsive to supplier needs

Strategy

• Taking the lead in ERM– Be crystal clear on how it fits with WWP vision

• customer satisfaction (supplier as customer)

• total value chain efficiency

• balanced and optimized supply chain

– Define ERM space– Start moving

Leverage Experience• Lessons from Dell Online

– Simple = good– Empower the customer with information

– Support the customer with information

• Lessons from BTO strategy– Build to order to satisfy customers by putting

together discrete pieces of technology available to everyone

– Benefit from work done by others– Fastest to market with products that meet demand

Solicit Support From Partners

• Get everyone on board from the outset

• Incorporate suppliers and other users of system into development process

• Ensure all users are supportive of initiative

• Develop compelling sales pitch

• Sell suppliers on virtual value web

• Use incentives

minimize risk coordination allows rapid change

more beta testers =more feedback

diversity of userneeds

alienate non-testers Parallel systems

cause confusion solution may cater

to limited audience

100% of suppliersbecome beta tester

Depth Breadth

Pros

Cons

Consider Rollout Plan - Depth vs. Breadth

Technology

• No single off-the-shelf solution for ERM

• Customer driven vs. technology driven

• Make it easy to do business with Dell

• What are right tools for the job?– Not tied to any single web development tool– System should be open– IIS, ASP, SSL already in use on Dell Online– Database driven

ERM Technology Providers

http://grok.bus.utexas.edu/Hotchandani/SAP

• Hundreds of products / services available

• Reviews available in repository– Enterprise software evaluation– Internet development tools– HTML development tools – Content hosting

Develop A Security Model • Where does data reside?• Consider asymmetrical security interests • Determine value of data to be protected• Determine baseline security needed• Conduct audits• Restrict access• Educate employees• Statement of understanding with partners

Hurdles

• Dell’s disparate IT organization

• Supplier buy-in: is this what they want and does it add value?

• Understand limits of web in building relationships

• How is process institutionalized – What happens when ______ leaves

So?

• Effective strategic relationship management will enable and facilitate tactical collaboration in the future

What might be next?

• Online bidding

• Once transactions with suppliers move to Web, incorporate OLAP system

• Web based OLAP front end to DSS once transactions move online

Our Own ExperiencesWith A Virtual Workplace

• Created a web repository that acted as a knowledge base for the team and Dell– Most work still occurred in physical meetings

and by email– Dell wanted us to inform them of new additions

to the repository with an email

• Conclusion: People resist change

Questions

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