Chapter 2
Major Business
Initiatives: Gaining
Competitive
Advantage with IT
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
STUDENT LEARNING
OUTCOMES
1. Define supply chain management
(SCM) systems and describe their
strategic and competitive
opportunities.
2. Define customer relationship
management (CRM) systems and
describe their strategic and
competitive opportunities.
2-2
STUDENT LEARNING
OUTCOMES
3. Explain the significance of enterprise
resource planning (ERP) software as
the integration of functional
software systems.
4. Define social media and describe a
few of its many dimensions that
make it important in the business
world.
2-3
DEATH OF A TRAVEL AGENT
2-4
DEATH OF A TRAVEL AGENT
The previous slide shows the
dramatic impact of technology on
the number of travel agents in the
U.S.
Because consumers are now
“empowered,” travel agents have
declined from 171,600 (1999) to
95,000 (2009)
2-5
Questions
1. When you last flew, did you use a
travel agent or directly to the Web
for tickets?
2. What is your preferred travel site?
What features do you like?
3. Why do airlines support moving
reservation systems to the Web?
2-6
CHAPTER ORGANIZATION
1. Supply Chain Management
Learning Outcome #1
2. Customer Relationship Management
Learning Outcome #2
3. Enterprise Resource Planning
Learning Outcome #3
4. Social Media
Learning Outcome #4
2-7
SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM) –
tracks inventory and information among
business processes and across companies
Supply chain management (SCM)
system – IT system that supports supply
chain management
Just-in-time (JIT) – method for
producing or delivering a product or
service just at the time the customer
wants it 2-8
Dell’s Effective SCM Through
JIT
2-9
Supply Chain Management
Most supply chains use inter-
modal transportation, multiple
transportation channels (railway,
truck, etc) to move products from
origin destination
This creates supply chain
complexities
2-10
Opportunities of SCM
Business strategy
Overall cost leadership
Running the organization (RGT)
framework
Goal is to squeeze out every penny
of cost possible in the supply chain
This will optimize fulfillment,
logistics, production, revenue and
profit, and cost and price
2-11
IT Support for SCM
SCM systems pioneered by specialist
companies
SCM is now part of ERP software
(discussed later)
Learn more
Supply Chain Knowledge Base
Supply Chain Management Review
i2 Technologies
CIO Magazine
2-12
CUSTOMER RELATIONSHIP
MANAGEMENT
Customer relationship
management (CRM) system –
uses information about customers
to gain insight into their needs,
wants, and behaviors in order to
serve them better
Includes multi-channel service
delivery, multiple ways in which
customers can interact with a
business
2-13
The Focuses of Customer
Relationship Management
Analytics is now a
huge part of CRM.
Analytics use hard
data to support
decision making.
2-14
Customer Relationship
Management
Sales force automation (SFA)
systems – automatically track all
the steps in the sales process
Sales lead tracking
Listing potential customers
Market and customer analysis
Product configuration
Getting repeat customers
2-15
GM’s Sales Force Automation
(Purchase Funnel)
2-16
Opportunities of CRM
Business strategy
Differentiation and focus
Growing the organization
Classic goals
Treating customers better
Understanding their needs and wants
Tailoring offerings
Providing “delightful” experiences
2-17
IT Support for CRM
Front-office systems – primary
interface to customers and sales
channels
Back-office systems – fulfill and
support customer orders
Both interface to CRM database and
analysis and reporting systems
2-18
IT Support for CRM
2-19
IT Support for CRM
Software-as-a-service (SaaS) –
software model in which you pay for
software on a pay-per-use basis
instead of buying the software
Learn more
Salesforce.com
CIO Magazine
CRM Today
destinationCRM.com
2-20
ENTERPRISE RESOURCE
PLANNING
How do you bring together SCM, CRM,
and other systems? With an ERP
system.
Enterprise resource planning
(ERP) system – collection of
integrated software for business
management, accounting, finance,
supply chain management, inventory
management, customer relationship
management, e-collaboration, etc. 2-21
ENTERPRISE RESOURCE
PLANNING
ERP is big business
Federal government will spend $7.7
billion on ERP in 2009
60% of Fortune 1000 companies
have ERP systems
2-22
ENTERPRISE RESOURCE
PLANNING
The Big 4 ERP Vendors
2-23
ERP Evolution
MRP – 1970s; focus on production
planning, calculating time requirements,
procurement; basic automated
manufacturing focus
MRP II – 1980s; closed the loop to include
financial and accounting systems and serve
as a decision support tool for managers
2-24
ERP Evolution
ERP – late 1980s/early 1990s; focus on
critical “time to market”; shorter lead
times; customers want it now
ERP II – today; focus on complete ERP
integration with CRM, business
intelligence, and a host of other
applications across the organization
2-25
ERP Functionality
2-26
ERP
Attempts to integrate everything
CRM drives what SCM will produce
Everyone works together in e-collaboration
The entire organization knows the entire
organization
Think about your school
Can you register for class with a bill
outstanding?
Can you register for a class for which you
haven’t completed the prerequisite?
2-27
ERP Integrates Everything
2-28
ERP and Market Size
Many ERP vendors based on
organization size
Small business – less than 100 seats
Medium-size business – 100-500
seats
Large business – more than 500
seats
2-29
SOCIAL MEDIA
Social media – Web-based and
mobile technologies that create
interactivity among users, mostly
allowing users to be both creators
and consumers of content
2-30
SOCIAL MEDIA
Fueled by Web 2.0
Web 2.0 – second generation of the
Web focusing on online collaboration,
users as both creators and modifiers
of content, dynamic and customized
information feeds, and many more
engaging technologies
2-31
The Evolution of the Web
2-32
Some Aspects of Social Media
Social networking
Social shopping
Social playing
Social “saving the world”
Social locationing
There are many more
2-33
Social Networking
Social networking site – site on
which you post information about
yourself, create a network of friends,
read about other people, share
content, and communicate with
people
The big ones
Facebook & LinkedIn
Google+
StumbleUpon, Twitter, YouTube
2-34
Social Networking Players
2-35
Social Shopping
See what other people are buying
and wearing, trying to find the same,
and informing others of where the
best deals are
Pepsi – social vending machines
Bartab
Groupon
2-36
Social Playing
MMORPGs (massively
multiplayer online role-playing
games) – thousands or millions of
people play and interact in a robust
virtual world
2-37
Social Playing
2-38
Social Playing
World of Warcraft
Largest, 11 million players
Complete quests in a world of monsters,
uber-warriors, and mythical creatures
Second Life
Virtual world
Avatar
Linden dollars
2-39
Social Playing
Zynga
Over 270 million play Zynga games on
Facebook
Cityville
Farmville
Mafia Wars
Zynga Pokerr
Words with Friends
2-40
Social “Saving the World”
Games that support sustainability and
triple-bottom-line efforts
2-41
Social “Saving the World”
Pepsi Refresh Project – education,
arts and music, communities
Toyota Ideas for Good – use Toyota
technology for non-auto uses
Volkswagen Fun Theory – change
behavior of people for the good
TOMS One-for-One – buy shoes and
have a free pair donated to someone
2-42
Social Locationing
Social locationing (location-
based services) – use of a mobile
device and its location to
Check into locations
Find friends and their locations
Receive rewards
Take advantage of specials based on
location
2-43
Popular Social Locationing
Systems
Geoloqi
Facebook Places
SCVNGR
Google Latitude
Foursquare
Gowalla
2-44
