MANAGEMENT INFORMATION

SYSTEM

TERM REPORT
ON
“Customer relationship management,
Enterprise resource planning
$
E-commerce”

Submitted By:
(GROUP E)

Naraina VidyaPeeth Management

Institute
Gangaganj, Panki, Kanpur-208020

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 Index

Customer relationship management.

Enterprise resource planning.

E-commerce.

Group members-

Anjani yadav

Ankita dixit

Priyanka pandey

Mansi singh

Nidhi srivastava

Hasrat wahab.

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 Section-1

Customer Relationship
Management

Introduction:

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 Today, customers are in charge. It is easier than ever for
customers to comparison shop and, with a click of the mouse,
to switch companies. As a result, customer re1ationsbzps have
become a company’s most valued asset. These relationships
are worth more than the company c products, stores, factories,
web addresses, and even employees. Every company’s
strategy should address how to find and retain the most
profitable customers possible [9].

The primary business value of customer relationships today is

indisputable. That’s why we emphasized in Chapter 2 that
becoming a customer-focused business was one of the top
business strategies that can be supported by information
technology Thus, many companies are implementing customer
relationship management (CRM) business initiatives and
information systems as part of a customer-focused or customer
centric strategy to improve their chances for success in today’s
competitive business environment. In this section, we will
explore basic CRM concepts and technologies, as well as
examples of the benefits and challenges faced by companies
that have implemented CRM systems as part of their customer-
focused business strategy Customer relationship management
systems are enabling businesses of all sizes and industries to
dramatically improve their focus on customer service.

Let’s start with a real world example. Read the Real World Case
on the next page. We can learn a lot about the many ways
companies are implementing customer relationship
management systems.

What is CRM?

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 Managing the fatal range of the customer relationship involves
two related objectives: one, to provide the organization and all
of its customer-facing employees with a single, complete view
of every customer at every touch point and across all channels;
and, two, to provide the customer with a single, complete view
of the company and its extended channels [26].

That’s why companies are turning to customer relationship

management to improve their customer focus. CRM uses
information technology to create a cross-functional enterprise
system that integrates and automates many of the customer-
serving processes in sales, marketing, and customer services
that interact with a company’s customers. CRM systems also
create an IT framework of Web- enabled software and
databases that integrates these processes with the rest of
company business operations. CRM systems include a family
of software modules that provides the tools that enable a
business and its employees to provide fast, convenient,
dependable, and consistent service to its customers. Siebel
Systems, Oracle, PeopleSoft, SAP AG, and Epiphany are some
of the leading vendors of CRM software. Figure 8.1 illustrates
some of the major application components of a CRM system.
Let’s take a look at each of them.

Contact and Account Management:

CRM software helps sales, marketing, and service professionals

capture and track relevant data about every past and planned
contact with prospects and customers, as well as other
business and life cycle events of customers. Information is
captured from all customer touch points, such as telephone,

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 fax, e-mail, the company’s web- site, retail stores, kiosks, and
personal contact. CRM systems store the data in a common
customer database that integrates all customer account
information and makes it available throughout the company via
Internet, intranet, or other network links for sales, marketing,
service, and other CRM applications.

Sales:

A CRM system provides sales reps with the software tools and
company data sources they need to support and manage their
sales activities, and optimize cross-selling and up-selling.
Examples include sales prospect and product information,
product configuration, and sales quote generation capabilities.
CR1vI also gives them real-time access to a single common
view of the customer, enabling them to check on all aspects of
a customer’s account status and history before scheduling
their sales calls. For example, a CRM system would alert a bank
sales rep to call customers who make large deposits to sell
them premier credit or investment services. Or it would alert a
salesperson of unresolved service, delivery, or payment
problems that could be resolved through a personal contact
with a customer.

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 The major application clusters in customer
Relationship management

Marketing

and Fulfillment:

CRIVI systems help marketing professionals accomplish direct

marketing campaigns by automating such tasks as qualifying
leads for targeted marketing, and scheduling and tracking
direct marketing mailings. Then the CRM software helps
marketing professionals capture and manages prospect and
customer response data in the CRM database, and analyzes the
customer and business value of a company’s direct marketing
campaigns. CRM also assists in the fulfillment of prospect and
customer responses and requests by quickly scheduling sales
contacts and providing appropriate information on products
and services to them, while capturing relevant information for
the CRM database.

Customer Service and support:

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 A CRM system provides service reps with software tools and real-
time access to the common customer database shared by sales
and marketing professionals. CRM helps customer service
managers create, assign, and manage requests for service by
customers. Call center software routes calls to customer
support agents based on their skills and authority to handle
specific kinds of service requests. Help desk software assists
customer service reps in helping customers who are having
problems with a product or service, by providing relevant
service data and suggestions for resolving problems. Web-
based self-service enables customers to easily access
personalized support information at the company website,
while giving them an option to receive further assistance online
or by phone from customer service personnel.

Retention and Loyalty Programs:

Consider the following

• It costs six times more to sell to a new customer than to sell to an

existing one.

• A typical dissatisfied customer will tell eight to ten people about

his or her experience.

• A company can boost its profits 85 percent by increasing its

annual

Customer retention by only 5 percent.

• The odds of selling a product to a new customer are 15 percent,

whereas the odds, of selling a product to an existing customer
are 50 percent.

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• Seventy percent of complaining customers will do business with
the company again if it quickly takes care of a service problem
[9].

That’s why enhancing and optimizing customer retention and loyalty is a

major business strategy and primary objective of customer
relationship management. CRM systems try to help a company
identify, reward, and market to their most loyal and profitable
customers. CRM analytical software includes data mining tools
and other analytical marketing software, while CRM databases
may consist of a customer data warehouse and CRM data
marts. These tools are used to identify profitable and loyal
customers and direct and evaluate a company’s targeted
marketing and relationship marketing programs toward them.
Figure 8.2 is an example of part of a proposed Web-based
report format for evaluating Charles Schwab & Co.’s customer
retention performance.

PHASES OF CRM

The three Phases of CRM:

Figure 8.4 illustrates another way to think about the customer and
business value and component of customer relationship
management. We can view CRM as an integrated system of
Web-enabled software tools and databases accomplishing a
variety of customer-focused business processes that support
the three phases of the relationship between a business and its
customers [9].

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ACQUIRE-A business relies on CRM software tools and databases to
help it acquire new customers by doing a superior job of
contact management, sales prospecting, selling, direct
marketing, and fulfillment. The goal of these CRM functions is
to help customers perceive the value of a superior product
offered by an outstanding company.

ENHANCE- Web-enabled CRM account management and customer

service and support tools help keep customers happy by
supporting superior service from a responsive networked team
of sales and service specialists and business partners. And
CRIVI sales force automation and direct marketing and
fulfillment tools help company’s cross-sell and up sell to their
customers, thus increasing their profitability to the business.
The value perceived by customers is the convenience of one-
stop shopping at attractive prices.

How CRM supports the three phases of the relationship between a

business and its customers.

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RETAIN- CRM analytical software and databases help a company
proactively identify and reward its most loyal and profitable
customers to retain and expand their business via targeted
marketing and relationship marketing programs. The value
perceived by customers is of a rewarding personalized
business relationship with “their company.”

CRM's Challenges - What's going wrong?

CRM, despite all the talk about it being one of the most 'profitable'
customer strategies of the decade, still allows room for failure.
The most important aspect of CRM problems is its excellent
ability to achieve customer retention but its failure to do
so. This is indirectly responsible for CRM collapse. What
actually is CRM failure and why does it occur? Generally one of
the reasons this happens is because most organizations that

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 actually employ CRM, experience a lot of confusion about its
attributes and what it really is. Some would define it as a
business strategy while others view it as something to do with
technology.

The statistics show that only one in every six companies that
have installed CRM has been successful. CRM has lost its
appeal as it has failed to meet expectations. Almost 75% of
projects have not succeeded in delivering the expected ROI
and have faced numerous problems with CRM. However the
absolute failure rate is just 5%. It's mostly the larger corporate
that fail. This happens generally because smaller projects fair
better. Mid size organizations also have a higher success rate.

What are the Problems with CRM?

Exorbitant Costs

One of the problems with CRM is the huge investment needed to

maintain a customer database. The additional expense comes
because of the money needed for computer hardware, software,
personnel etc. The costs involved are enormous and most often
than not the resultant ROI from the CRM implementation fail to
cover the costs involved. This leads to a negative feeling within
the company about CRM and it’s so called successes and
ultimately results in CRM collapse.

Inadequate Focus on Objectives

Secondly when starting off on a CRM strategy the objectives are clearly
established and followed. Management and employees know

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 fully well what is needed to work towards organizational goals.
The goals themselves are clearly laid out after meticulous
planning. However midway during the CRM implementation,
when hard times hit, the organization loses sight of its goals
and ultimately steers away from it. At times goals get
interchanged and lose their importance. Companies find
themselves work at home directory towards goals that are less
important and forgetting the ones that really are. This is one of
the fundamental and mostly felt problems in CRM.

Insufficient Resources

Sometimes in phased implementation of CRM, if conditions worsen

within the company or without, organizations start lessening
their budgets for the current phase. When funds are less,
budgets strained, the necessary costs required for CRM
success are not employed. As a result CRM starts failing
midway. The most important aspect- that of maintaining
consistency is lost. Organizations fail to utilize the necessary
resources for success and thus result in failure.

Inappropriate Metrics

Organizations have basically failed to use the right metrics. Failure to

choose the right method of measurement and implement it is
one of the chief reasons why CRM fails. Different metrics have
to be employed for the calculation of different goals.
Companies seldom pause to analyze which metric is needed for
which element and ultimately use the wrong one. This results in
faulty measurement and CRM disappointments.

Complex Systems

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CRM simple? The hype says so, the experts agree. Is this really the
case? Organizations that have employed it though have a
different opinion. They are witness to the fact that CRM
packages can be highly complex, with vast amounts of
intricacies. If this is the case then how do simple employees
cope? The answer lies in sufficient training being given in order
that they are able to comprehend and deal with the difficulties
easily.

Business Needs Most Important

One of the chief mistakes companies make is letting the technology

drive their CRM functionality. What's happening is that
companies are endeavoring to go to the industry leaders, gain
the technology needed and then apply it to the business
problems only to find that it isn't solving any of them. Instead
they need to analyze their business problems first and then find
the appropriate CRM solution for it. This backwards step is
responsible for CRM failure.

No Customer Focus

Customer oriented strategy? Yes, CRM does play the part. Customer
oriented employees? Now 'that' requires an effort on the part of
the organization. It needs to motivate employees to be
absolutely customer centric. This involves tremendous effort
on the part of the company but is highly essential. CRM
problems arise because of employee reluctance to be more
customers focused. The result is a highly expensive customer
strategy being adopted by the company in an effort to retain
customers, with reluctant, unfocussed employees
implementing it.

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Slow Returns

Another failure of CRM is its inability to provide quick returns on

investment. Organizations find themselves waiting for years
before they are able to see actual returns on their investment.
Most experts view the low ROI as a major problem with CRM
but fail to see that the long wait is just as difficult. Waiting for
years to see their investments show results, tests patience and
leads to both employees and management slackening their
efforts in the implementation.

Most CRM problems can be mitigated, resolved and ultimately

obliterated. What is highly required is the ability to focus on the
business needs, choose Right resources and assume the right
metrics. Adopting these measures would go a long way in
alleviating CRM problems.RM package that works towards it,
employ the

CRM SUCCESS

Reasons for CRM Success

Set the CRM Vision: Clear and Definable Goals and Expectations

An old proverb said that you can go anywhere as long as you start from
where you are, not from where you think or wish you might be.

Leading a CRM effort starts with looking at your company as customers

do. How is your customer relationship management operating
now? Top executives should take steps such as answering an

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 ad, calling your toll-free number for service, placing an order,
and signing up to get emails.

In a successful initiative, your entire company will be deepening its

ability to see better from the customer's point of view.

What are your company's value proposition and competitive advantage

in their eyes? How can you improve each of these attributes?

How do your employees answer these questions?

What customer needs can you serve better?

What feedback mechanisms can you set up to measure these

perceptions -- both now and after CRM implementation? You'll
need these mechanisms to carefully quantify the business case
for your CRM effort. The feedback you gather will document
your eventual progress. It's critical that you develop objectives
that are measurable, and have key performance metrics in
place.

As you become customer-centric, look at your competitors the way your

customers see them. What are competitors doing for your
customers that the customers like?

Less-successful CRM initiatives, instead of looking from the customer's

point of view at the company, look from the company's point of
view at the customer, in an effort to extract more value.

Gather Requirements Carefully

Your business units and the IS department must agree on what

customer-related data is needed, where it will come from, and
how it will be gathered and distributed.

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It's critical to prioritize the order in which business areas, such as
marketing, sales and service, will be addressed.

It may be wise to have executives from the marketing, sales and service
areas are on a CRM committee, as they lead the teams that will
benefit most from the CRM effort.

This is the time to re-engineer your business processes with the optimal
customer experience in mind. It's also an opportunity to
increase procedural effectiveness and reduce costs. For
instance, a well-thought-out system can eliminate and reduce
the duplicate manual entry of customer data. You’re automating
processes. Don't make the mistake some businesses do of
automating bad ones.

Set the Implementation Strategy Carefully

Choose small, well-defined parameters for your pilot program, and

spend time refining the key performance indicators. Remember
the old saying that "you can't improve what you can't
measure."

Make sure you have a project leader who has the experience to manage
project scope carefully. It's inevitable that change requests will
occur, and they'll likely put great pressure on the budget,
timeline, and overall chances of success. Keep focused on

Your initial milestones and be sure to deliver them. Avoid the natural
tendency to try to do too much too soon.

Motivate and Train Your People

It will be natural for your employees to resist change. They have

procedures and processes they're already familiar with.

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 Salespeople, especially, tend to have their own individual
systems for doing their jobs, from notebooks to index cards to
PDA's. You need to get buy-in. It's important to consult with
your employees, get their feedback, and constantly show each
of them how they will benefit from the changes. People give up
familiar processes IF they see there's something better ahead.

Training must be accessible and ongoing. The most important time for
training is in the months after deployment.

Set realistic expectations, provide ongoing feedback, announce

milestones, and reward early gains, perhaps with incentives.
The entire organization needs to collaborate as it delivers more
customer value and becomes more customer-centric.

Ensure Quality Data

Apart of your training needs to focus everyone on the need for accurate,
complete data. Emphasize to employees that great customer
data is the key to unlocking customer value. Show each person
how they will benefit. Make everyone aware of how marketing
campaigns can be monitored more effectively, more accurate
sales forecasts can come together more quickly, and add-on
sales will be easier.

Set clear standards for data quality. Communicate them widely. Make
someone the champion of clean data. Devise a plan for
checking and maintaining data to ensure it is accurate and
clean.

Engage in Continuous Improvement

You've set up mechanisms for employee, partner and customer

feedback. As you gather that feedback, take part in continuous

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 improvement. Refine your strategies and processes, set new
goals, and devise tactics to achieve them. Monitor the entire
system for employee participation and make sure it's getting
accurate and complete data.

You might consider setting up incentive bonuses for people based on

increasing customer satisfaction.

These are some of the most common steps that have resulted in CRM
success and solid ROI. Now take a look at CRM pitfalls to avoid.

CRM FAILURES

Reasons for CRM Failures

CRM Strategy Errors

The right leadership is not in place

A business leader needs to be in charge of the CRM effort, not IT.

Successful CRM is a major business initiative, not a technology
initiative.

CRM Strategy not clear

Your CRM strategy and vision need to define what customers

experience at each touch point, and how will they be handled at
each touch point. The vision needs to be clear to everyone. A
major pitfall occurs when your business constituents have

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 differing expectations of CRM's benefits. Sharing a common
vision is key.

The CRM strategy is different from the business strategy

CRM is sometimes seen as a lower level automation step or patch,

rather than a top level re-thinking of how customers are served.
Your CRM strategy and business strategy need complete
alignment.

Processes not re-designed

CRM is an expensive way to automate inefficient or ineffective

processes.

Companies get better results from CRM when they begin by focusing on
sales processes: how do customers need to be approached,
convinced, served and satisfied? Only when these questions
are answered should steps be taken to plan software or
process changes.

By managing and measuring the sales processes (‘opportunity

management? and "sales method? In CRM terms) it is possible
to take full advantage of CRM's potential. The steps taken
should include:

Defining and developing new market segments

Increasing the ability to:

Cross-sell

Up-sell

Retain

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Acquire

Reactivate Experience (Enhancement through better customer

interaction strategies)

Customers not consulted

What do your customers think of your company before, during, and after
the CRM implementation? What are they happy with, and what
are their complaints? How are other suppliers serving them in
ways that they like? Too often, surprisingly enough, the "C" in
"CRM" is not consulted in all phases of the initiative.

Unclear metrics

It's critical to review your plan to measure key performance indicators,

and ROI. Can your metrics truly determine the real business
value of your effort? The quality of metrics has been a deciding
factor in making or breaking many CRM projects.

Implementation Errors

Inability to link channels

Have you considered ALL customer touch points and processes? CRM
projects often have focused on some parts of the customer
experience, but ran into trouble when they were unable to link
with or serve well all parts of the customer experience.

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Lack of preparedness for continuous improvement

Be ready for bumps in the road. Be ready to refine strategies, revise

goals, re-set metrics, and learn from feedback. Successful CRM
projects are rarely completely successful from the outset.

People errors

Introducing CRM to hundreds of employees at a time

It's easy to want to do too much, too fast. Get it right first with a small
team of employees chosen to represent a cross-section of your
company. Choose an initial project that can make a dramatic
difference, with clear key performance indicators. Strong pilot
results will help you avoid the next pitfall:

Changing the system, but not the people

It's easy to focus too much on the new technologies and processes
rather than focusing first on the people who will use them
successfully. You need employee excitement about doing a
better job for customers. You need employee feedback and
overall buy-in. The entire company needs to own "customer-
first." They need to see that the CRM vision you all hold takes
them to a better place than where they are now.

Process errors

Instead of enhancing new processes, changing the CRM system to fit

old processes

To avoid the pain of revision, some companies don't take the

opportunity to re-engineer and optimize their processes. They

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 look to CRM as a patch rather than an opportunity from the
ground up to increase customer satisfaction, revenue, service
and overall productivity.

Technology Errors

Customer data is in more places than expected

As implementation gets underway, key data can turn up in salespeople's

PDA's, spreadsheets, handwritten notes, and legacy systems.
To avoid surprise integration nightmares, the requirements
gathering stage needs to be careful and thorough.

Different CRM solutions are in place but do not work well together.

Often marketing, sales and service departments already have different

types of CRM software, from different vendors, to track the
same customers. As a result, these departments can't share
data, and have redundant support and administration costs.

Customer Management Errors

Customers do not experience new benefits

The ultimate test is to be able to demonstrate increased satisfaction

among customers, along with increased customer value to your
business. This goal can inform every choice you make during
planning and implementation. But just like the adage "watch
the ball" in sports, it's a fundamental often overlooked.

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Your vendor's experience with CRM implementation is one of your best
assets. See a selection of leading vendors.

The Truth about CRM Success & Failure

When Carl Underhill accepted the job as chief information officer of

Pioneer Investments in April 2001, he began his first day
staring failure in the face. The global financial services firm that
hired Underhill built its reputation on making choice
investments--that is how the 74-year-old company grew to
manage $98 billion in assets, employing a 90-person sales
force selling to 40,000 financial advisors. However, even
Pioneer's successes in financial investments could not prepare
the company for what was to come with its CRM investment.

In early 2000 Pioneer decided to proactively manage its client contacts,

sales and marketing information and new-product testing
results by implementing a CRM solution. Pioneer's goal was to
provide rich data about client behavior and competitors to
internal marketing and sales staff, as well as to field sales
teams, via a Web-based solution.

After examining various products, Pioneer bought a full CRM footprint

from E.piphany Inc. The decision was based largely on
E.piphany's strength in Web-based services, which was
important given Pioneer's large field staff. Additionally,
E.piphany wanted to build its financial services clientele, so it

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 was amenable to helping Pioneer mold and tailor the product
specifically for its needs.

Pioneer began to implement the E.piphany suite in July 2000, but within
months it became clear that the solution was too big to make
for a successful, timely, on-budget rollout. The plan stalled by
November and sat idle until Underhill's arrival six months later.

With the findings of well-respected research firms, such as Gartner

Inc. and Meta Group Inc., which state that anywhere from 50
percent to 80 percent of CRM implementations fail, many would
likely think Underhill's chances for a successful CRM
implementation were slim. These statistics have thoroughly
scared top-level executives to the point of either abandoning
existing CRM implementations or halting plans to begin one.
However, CRM consultants are more optimistic about CRM
success rates, as they claim inconsistencies exist not in the
analysts' research, but in their definition of failure.

Despite CRM consultants' efforts to allay their customers concerns, the

research firms' statistics quickly spread throughout the
industry. This sent shock waves that are still reverberating
today. "Companies are looking at those numbers and saying,
'never mind' to CRM," says Sue Handman, CRM solutions
director at RCG Information Technology, a consulting firm
based in Edison, N.J.

Barton Goldenberg, president of ISM Inc., a Bethesda, M.D.--based CRM

consultancy, has performed more than 300 CRM
implementations with a success rating of more than 90 percent.
Even so, he is also finding more reluctance toward CRM
implementations from his clients: "I have customers asking me,

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 'With the failure rate at 80 percent, why do you think this
project should succeed?'"

While top-level executives are swayed by the broad failure statistics,

confident consultants are not. "I vehemently disagree with the
statistics. Not only are they unfair, but they are doing
unreasonable damage to the CRM industry. These numbers are
damaging top-management perception levels," Goldenberg
says. "I'm not knocking the leading IT analysts. It is their
business to provide general reports of interest to their paying
client-base. What concerns me is the way they measure those
success rates."

Handman concurs: "I agree that the analysts who reported these
statistics believe them, but I don't believe they are right. I
believe that defining failure is the issue."

Explaining the Numbers

Last fall Gartner issued a statement that said, "Through 2006 more than
50 percent of all CRM implementations will be viewed as
failures from a customer's point of view." In this case the
customers are the companies that "are receiving the benefits of
these processes," says Scott Nelson, a vice president and
research director at Gartner.

Despite common misconceptions that 80 percent of all CRM

implementations fail, Nelson says that the 80 percent failure
rating only applies to sales automation implementations. "CRM
should provide salespeople with better pipeline reporting,
rather than only make it easier to sell more. The latest CRM
solutions are forcing salespeople to enter more administrative
numbers than before. As a result firms find they spend millions

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 in sales automation only to learn that sales reps are still using
ACT," Nelson says.

Yet, not all components of CRM have such a high failure rate. "It
depends on what subset of CRM you are implementing. Email
response management systems tend not to have that kind of
failure rate. The 50 percent failure rate was across the
spectrum," Nelson says. "We wouldn't label it a failure unless
one aspect was so overwhelming, such as a drop in customer
satisfaction, shopping cart abandonment rates go up, or sales
decrease."

Nelson concedes that measuring CRM failure is often difficult. The most
common problem is many companies implementing CRM "don't
apply good project management skills" and do not set metrics
that can help them define success or failure, Nelson says.

Setting Objectives

This is where consultants find holes in the research firms' assertions.

Without a predefined set of mutually agreed upon metrics for a
CRM implementation, failure cannot be accurately measured,
consultants maintain. Without these metrics failure rates are
subjective, because they are based on what matters most to the
individual people involved and not on a mutually agreed upon
set of values.

To prove how the same CRM implementation can be viewed as both a

failure and a success, Goldenberg cites one client that is
implementing a sales and marketing CRM project involving
more than 3,000 people. "When asked if it was successful, the
marketing people said for marketing purposes the global
customer profiles were a raving success. The CIO, however,

27
 said the CRM project was a dismal failure, because eighty-four
databases were not properly integrated into one holistic data
structure," Goldenberg says.

Nelson acknowledges the subjectivity of Gartner's findings. "There's a

certain element of subjectivity, because there were multiple
analysts participating in different areas, and as a result there
isn't a unified definition of failure. This was not one monolithic
quantitative study. It was pieces of studies put together," he
says.

So the question remains, how does one define failure when

implementing a CRM solution? "The failure rate is driven by not
clearly understanding what you want to accomplish, and then
designing your project to focus on, and deliver, results that are
not aligned with your goals," says Ray Hicks, senior consultant
at Kowal Associates Inc., based in Boston.

According to RCG's Handman, to define failure it is essential to first

define success by outlining expectations before implementing
the CRM solution. "Failure is the inability to meet mutually
defined expectations. A lot of customers haven't set these
expectations. Everyone, including IT, salespeople, customers,
the software vendor, and integrators, has to agree on what the
expectations are, how the project will be implemented, and over
what time frame. And if they can't define the end product they
should define it in pieces," Handman says.

Breaking up the CRM project into smaller, more manageable

components is critical, because business needs change over
time. But not all customers recognize this initially. Goldenberg
recalls one customer, Jim Rubin, CIO of Tripos Inc., a provider
of drug-discovery chemistry, software, and enterprise

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 informatics, who initially refused to set a business case with
metrics prior to Tripos' CRM project. "Nearly every company
I've been in is not static. You need a business plan that takes
that into consideration. If we change our business, you can't
track that against your business plan, because you're
comparing apples to oranges," Rubin says. "I pushed back
pretty hard on that. I'm not particularly a fan of a report that sits
on a shelf and doesn't get used."

"He was heading for a shipwreck," Goldenberg says. However,

Goldenberg persisted, and with Handman's needs in mind, he
suggested writing a business case with smaller, more
attainable goals over a shorter period of time.

Goldenberg's persistence paid off. "I can't claim that I fully respected
Bart's approach when we retained him; however, [implementing
CRM] in stages and demonstrating the benefits to each stage is
critical to the success," Rubin concedes.

Trying to implement the whole E.piphany suite at once, instead of in

manageable pieces, is what set Pioneer off course, Underhill
asserts. "When I came in, we took a look at the initial plan and
made a 180 degree turn," he says. "Besides being too large, the
major issue was that we couldn't get the [CRM] project map on
a white board and draw a business benefit against every
feature and function the suite offered. It didn't make sense to
implement everything like we had been trying to do."

Creating a Plan for Success

Underhill's plan was to isolate the portions of the E.piphany suite that
could provide true and immediate business benefit and start
with those. "The technology wasn't an issue since E.piphany

29
 lends itself to scalability. The biggest issue was simply trying
to be all things to all people," he says. "We took a small project
team and spread everyone so thin that no one could rapidly
address changing business needs. Breaking the
implementation into manageable parts solved that." But it was
a task the CIO found easier said than done.

"Rolling out portions of CRM solutions is difficult--they are so integrated

and built around the idea of end-to-end. To cut them up, your
approach has to be careful," Underhill says.

That careful approach began with creating workgroups of sales and

marketing teams, senior management, and the IT staff to hash
out which CRM functions had to be available immediately and
which could wait.

The group first determined sales force analytics was the most
immediate need. The goal was to take contact management in
its purest form and add features of CRM so the field sales staff
could get rich information to aid the sale, with a delivery
method that would replace telephony and hard-wired laptops.

To achieve this Pioneer invested $15,000 in Blackberry pagers last

September and developed software to integrate portions of the
E.piphany sales analytics solution with the pagers. Now
salespeople can query the system for information about a
client, such as its last big purchase. There is also an alert
system to push to user’s information that they specify
themselves.

Underhill says that now he is confident that every dollar spent on the
new technology will be earned back. "Even if building a CRM
solution in this manner doesn't allow us to save money, it

30
 allows us to use our funds efficiently," Underhill says. "We are
doing a smarter campaign that will translate to higher sales
later."

Moving Forward

Despite some of the damage that CRM consultants claim the research
firms' reports may have done to the industry, Gartner's Nelson
argues that the reports have helped the industry. "We have
some people accuse us on the hype cycle that it pushes CRM
into the trough," Nelson says. "However, it makes people
realize CRM has to be viewed as more than just a technology. It
helps firms become more conscious to properly staffing
projects and demanding more rigorous ROI work. It has helped
the market mature." Nelson says that he has seen this
firsthand: Clients are more informed about CRM and are
asking him better questions.

Pioneer and Tripos are prime examples of how organizations are getting
smarter about implementing CRM, and more success stories
like theirs are cropping up. In fact, analysts at the Aberdeen
Group Inc. are determined to point that out in a report called,
"What Works: Ten Successful Implementations in
CRM/Customer Contact Centers," which is slated for release
this summer.

"We expect to find that CRM really works," says Christopher Fletcher,
vice president and research director at Aberdeen Group. "This
is partly in response to the horror stories about the CRM failure
rate. We believe there are a lot of positive benefits that come
out of CRM implementations, both qualitative and quantitative."

31
Cross-channel integration truly
Insulates the customer from internal machinations

32
 Trends in CRM:

Increasingly, enterprises must create tighter collaborative

linkages with partners, suppliers, and customers, squeezing
out time and costs while enhancing the customer experience
and the total value proposition [22].

Figure 8.4 outlines four types or categories of CRM that are being
implemented by many companies today and summarizes their
benefits to a business. These categories may also be viewed as
stages or trends in how many companies implement CRM
applications, and the figure also outlines some of the
capabilities of CRM software products. Most businesses start
out with operational CRM systems such as sales force
automation and customer service centers. Then analytical CRM
applications are implemented using several analytical
marketing tools, such as data mining, to extract vital data about
customers and prospects for targeted marketing campaigns.

Increasingly, businesses are moving to collaborative CRM systems, to

involve business partners as well as customers in collaborative
customer services. This includes systems for customer self-
service and feedback, as well as partner relationship

33
management (PRM) systems. PRM applications apply many of
the same tools used in CRM systems to enhance collaboration
between a company and its business partners, such as
distributors and dealers, to better coordinate and optimize
sales and service to customers across all marketing channels.
Finally, many businesses are building Internet, intranet, and
extranet Web-based CRM portals as a common gateway for
various levels of access to all customer information, as well as
operational, analytical, and cooperative CRNI tools for
customers, employees, and business partners [3, 9]. Let’s look
at a real world example.

34
 Section –II

Enterprise Resource
Planning:

Introduction

What do Microsoft, Coca-Cola, Cisco, Eli Lilly, Alcoa, and Nokia

have in common? Unlike most businesses, which operate on
25-year-old back-office systems, these market leaders
reengineered their businesses to run at breakneck speed by
implementing a transactional backbone called enterprise
resource planning (ERP). These companies credit their ER?

35
 Systems with having helped them reduce inventories, shorten
cycle times, lower costs, and improve overall operations [9].

Businesses of all kinds have now implemented enterprise

resource planning (ERP) systems. ERP serves as a cross-
functional enterprise backbone that integrates and automates
many internal business processes and information systems
within the manufacturing, logistics, distribution, accounting,
finance, and human resource functions of a company. Large
companies throughout the world began installing ERP systems
in the 1 990s as a conceptual framework and catalyst for
reengineering their business processes. ERP also served as
the vital software engine needed to integrate and accomplish
the cross-functional processes that resulted. Now, ERP is
recognized as a necessary ingredient that many companies
need in order to gain the efficiency, agility and responsiveness
required to succeed in today’s dynamic business environment.

Read the Real World Case on the next page. We can learn a lot
about the major challenges businesses face when
implementing ER]? Systems.

What is ERP?

ER? is the technological backbone of e-business, an enterprise

wide transaction framework with links into sales order
processing, inventory management and control production and
distribution planning, and finance [91.

Enterprise resource planning is a cross-functional enterprise

system driven by an integrated suite of software modules that

36
 supports the basic internal business processes of a company.
For example, ERP forward for a manufacturing company will
typically process the data from and track the status of sales,
inventory, shipping, aid invoicing, as well as forecast raw
material and human resource requirements. Figure 8.6 presents
the major application) components of an ER]? System. Figure
8.7 illustrates some of the key cross-functional business
processes and supplier and customer information flows
supported by ERP systems.

ERP gives a company an integrated real-time view of its core

business processes, such as production, order processing, and
inventory management, tied together by the ERP application
software and a common database maintained by a database
management system. ERP systems track business resources
(such as cash, raw materials, and production capacity), and the
status of commitments made by the business (such as
customer orders, purchase orders, and employee payroll), no
matter which department (manufacturing, purchasing sales,
accounting, etc.) has entered the data into the system [22].

ERP software suites typically consist of integrated modules of

manufacturing, distribution, sales, accounting, and human
resource applications. Examples of manufacturing processes
supported are material requirements planning, production
planning, and capacity planning. Some of the sales and
marketing processes supported by ERP are sales analysis,
sales planning, and pricing analysis, while typical distribution
applications include order management, purchasing, and
logistics planning. ER]? Systems support many vital human
resource processes, from personnel requirements planning to
salary and benefits administration, and accomplish most

37
 required financial record-keeping and managerial accounting
applications. Figure 8.7 illustrates the processes supported by
the ERP system installed by the Colgate-Palmolive Company.
Let’s take a closer look at their experience with ERP.

Benefits and Challenges of ERP:

As the example of Colgate-Palmolive has just shown, ERP

systems can generate significant business benefits for a
company. Many other companies have found major business
value in their use of ERP in several basic ways [16].

Quality & Efficiency- ERP creates a framework for integrating and

improving a company’s internal business processes those
results in significant improvements in the quality and efficiency
of customer service, production, and distribution.

Decreased Costs- Many companies report significant reductions in

transaction processing costs and hardware, software, and it
support staff compared to the nonintegrated legacy systems
that were replaced by their new ERP systems.

Decision support- ERP provides vital cross-functional information on

business performance quickly to managers to significantly
improve their ability to make better decisions in a timely
manner across the entire business enterprise.

Enterprise Agility Implementing ERP systems breaks down many former

departmental and functional walls or “silos” of business

38
 processes, information systems, and information resources.
This results in more flexible organizational structures,
managerial responsibilities, and work roles, and therefore a
more agile and adaptive organization and workforce that can
more easily capitalize on new business opportunities.

The Costs of EPR:

An ERP implementation is like the corporate equivalent of a brain

transplant. We pulled the plug on every company application
and moved to PeopleSoft software. The risk was certainly
disruption of business, because f you do not do ERP properly,
you can kill your company, guaranteed [9].

So says Jim Prevo, ClO of Green Mountain Coffee of Vermont,

commenting on their successful implementation of an ERP
system. Though the benefits of ERP are many, the costs and
risks are also considerable, as we will continue to see in some
of the real world cases and examples in the text. Figure 8.8
illustrates the relative size and types of costs of implementing
an ERP system in a company. Notice that hardware and
software costs are a small part of total costs, and that the costs
of developing new business processes (reengineering) and
preparing employees for the new system (training and change
management) make up the bulk of implementing a new ERP
system. Converting data from previous legacy systems to the
new cross-functional ERP system is another major category of
ERP implementation costs [14].

The costs and risks of failure in implementing a new ERP system

are substantial. Most companies have had successful ERP

39
 implementations, but a sizable minority of firms experienced
spectacular and costly failures that heavily damaged their
overall business. Big losses in revenue, profits, and market
share resulted when core business processes and information
systems failed, or did not work properly. In many cases, orders
and shipments were lost, inventory changes were not recorded.

Causes of EPR Failures:

What have been the major causes of failure in ERP projects? In

almost every case, the business managers and IT professionals
of these companies underestimated the complexity of the
planning, development, and training that were needed to
prepare for a new ERP system that would radically change their
business processes and /information systems. Failure to
involve affected employees in the planning and development
phases and to change management programs, or trying to do
too much too fast in the conversion process, were typical
causes of failed ERP projects. Insufficient training in the new
work tasks required by the ERP system, and failure to do
enough data conversion and testing, were other causes of
failure. In many cases, ERP failures were also due to over
reliance by company or IT management on the claims

Figure 8.7: The business processes and functions supported by the ERP
system implemented by the Colgate-Palmolive Company.

40
Typical costs of implementing a new ERP system of ERP software
vendors or on the assistance of prestigious consulting fins
hired to lead the implementation

[12]. the following experiences of companies that did it right give us a

helpful look at what is needed for a successful ERP
implementation.

Trends in ERP:

41
Today, ERF is still evolving-adapting to developments in technology and
the demands of the market. Four important trends are shaping
ERP’s continuing evolution: improvements in integration and
flexibility, extensions to e-business applications, a broader
reach to new users, and the adoption of Internet technologies
[9}.

Figure 8.9 illustrates four major developments and trends that are
evolving in ERP applications [9, 13]. First, the ERP software
packages that were the mainstay of ERP implementations in the
1990s, and were often criticized for their inflexibility; have
gradually been modified into more flexible products.
Companies who installed ERP systems pressured software
vendors to adopt more open, flexible, standards-based
software architectures. This makes the software easier to
integrate with other application programs of business users, as
well as making it easer to make minor modifications to suit a
company’s business processes. An example is SAP R13
Enterprise, released in 2002 by SAP AG as a successor to
earlier versions of SAP R3. Other leading ERP vendors,
including Oracle, People- Soft, and J. D. Edwards, have also
developed more flexible ERP products.

Web-enabling ERP software is a second development in the

evolution of ERE The growth of the Internet and corporate
intranets and extranets prompted software companies to use
Internet technologies to build Web interfaces and networking
capabilities into ERP systems. These features make ER]?
Systems easier to use and connect to other internal
applications as well as to the systems of a company’s business

42
 partners. This Internet connectivity has led to the development
of interenterprise ER]? Systems that provide Web-enabled links
between key business systems (such as inventory and
production) of a company and its customers, suppliers,
distributors, and others. These external links signaled a move
toward the integration of internal-facing ERP applications with
the external-focused applications of supply chain management
(SCM) and a company’s supply chain partners. We will discuss
supply chain management in Section-III

All of these developments have provided the business and

technological momentum for the integration of ERP functions
into e-business suites. The major ERP software companies
have developed modular, Web-enabled software suites that
integrate ERP customer relationship management, supply chain
management, procurement, decision support, enterprise
portals, and other business applications and functions.
Examples include Oracle’s e-Business Suite and SAP’s my
SAP. Some e-business suites disassemble ERP components
and integrate them into other modules, while other products
keep ERP as a distinct module in the software suite. Of course,
the goal of these software suites is to enable companies to run
most of their business processes using one Web-enabled
system of integrated software and databases, instead of a
variety of separate e-business applications. See Figure 8.10.
Let’s look at a real world example.

43
 SECTION-3

Electronic COMMERCE:

44
 Introduction to e-commerce:

E-commerce is changing the shape of competition, the speed of

action, and the streamlining of interactions, products, and
payments from customers to companies and from companies
to suppliers [131.

For most companies today, electronic commerce is more than just

buying and selling products online Instead, it encompasses the
entire online process of developing, marketing, selling,
delivering, servicing, and paying for products and services
transacted on internet worked, global marketplaces of
customers, with the support of a worldwide network of
business partners. As we will see in this chapter, electronic
commerce systems rely on the resources of the Internet and
many other information technologies to support every step of
this process. We will also see that many companies, large and
small, are engaged in some form of e-combiners activities.
Therefore, developing an e-commerce capability has become
an important option that hold be considered by most
businesses today.

Read the Real World Case on the next page. We can learn a lot
about the challenges and opportunities in the field of electronic
commerce from this example.

45
E-commerce involves accomplishing a range of business processes to
support the electronic buying and selling of goods and
services.

The scope of e- Commerce:

Figure 9.2 illustrates the range of business processes involved in

the marketing, buying, selling, and servicing of products and
services in companies that engage in e-commerce [7].
Companies involved in e-commerce as either buyers or sellers
rely on Internet-based technologies and e-commerce
applications and services to accomplish marketing, discovery,
transaction processing, and product and customer service
processes. For example, electronic commerce can include
interactive marketing, ordering, payment, and customer
support processes at c-commerce catalog and auction sites on
the World Wide Web. But c-commerce also includes c-business

46
 processes such as extranet access of inventory databases by
customers and suppliers (transaction processing), intranet
access of customer relationship management systems by sales
and customer service reps (service and support), and customer
collaboration in product development via e-mail exchanges and
Internet news- groups (marketing/discovery).

E- Commerce Technologies:

What technologies are necessary for electronic commerce? The

short answer is that most information technologies and Internet
technologies that we discuss in s text are involved in electronic
commerce systems. A more specific answer is illustrated in
Figure 9.3, which is an example of the technology resources
required by many c-commerce systems. The figure illustrates
some of the hardware, software, data, and network components
used by Free Markets Inc. to provide B2B online auction c-
commerce services [5].

Categories of E-commerce:

47
 Many companies today are participating in or sponsoring three
basic categories of electronic commerce applications:
business-to-consumer, business to-business, and consumer-
to-consumer e-commerce. Note: We will not ‘.explicitly cover
business-to government (B2G) and e-government applications
in this text. However, many c-commerce concepts apply to
such applications.

Business-to-Consumer (B2C) c-Commerce

In this form of electronic commerce, businesses must develop

attractive electronic marketplaces to sell products and services
to consumers. For example, many companies offer c-commerce
websites that provide virtual storefronts and multimedia
catalogs, interactive order processing, secure electronic
payment systems, and online customer support.

Business-to-Business (B2B) e-Commerce

This category of electronic commerce involves both electronic

business marketplaces and direct market links between
businesses. For example, many companies offer secure
Internet or extranet c-commerce catalog websites for their
business customers and The hardware software, network, and
database components and IT architecture of B2B online
auctions provider Free markets Inc. are illustrated in this
Internet based Quick Source auction Service suppliers. Also
very important are B2B e-commerce portals that provide
auction and exchange marketplaces for businesses. Others

48
 may rely on electronic data interchange (ED1) via the Internet or
extranets for computer-to-computer exchange of e-commerce
documents with their larger business customer and suppliers.

Consumer-to-Consumer (C2C) e-Commerce

The huge success of online auctions like eBay, where consumers (as
well as businesses) can buy and sell with each other in an
auction process at an auction website, makes this e-commerce
model an important e-commerce business strategy. Thus,
participating in or sponsoring consumer or business auctions
is an important e-commerce alternative

49
Fir B2C, C2B (consumer-to-business), or B2B e-commerce

Electronic personal advertising of products or services to buy or sell by

consumers at electronic newspaper sites, consumer e-
commerce portals, or personal websites is also an important
form of C2C e-commerce.

50
 Essential e-commerce Processes:

The essential e-commerce processes required for the successful

operation and management of e-connect activities are
illustrated in Figure 9.4. This figure outlines the nine key
components of an e-commerce process architect-ore that is the
foundation of the e-commerce initiatives of many companies
today [11]. We will concentrate on the role these processes
play in e-commerce systems, but you should recognize that
many of these components may also be used in internal,
noncommercial-e-business applications. An example would be
an intranet-based human resource system used by a
company’s employees, which might use all but the catalog
management and product payment processes shown in Figure
9.4. Let’s take a brief look at each essential process category.

Access Control and Security:

E-cornered processes must establish mutual trust and secure

access between the parties in an e-cornered transaction by
authenticating users, authorizing access, and enforcing
security features. For example, these processes establish that
a customer and e-commerce site are who they say they are
through user names and passwords, encryption keys, or digital
certificates and signatures. The e-commerce site must then
authorize access to only those parts of the site that an
individual user needs to accomplish his or her particular
transactions. Thus, you usually will be given access to all

51
 resources of an e-commerce Site except for other people’s
accounts, restricted company data, and webmaster
administration areas. Companies engaged in

This e-commerce process architecture highlights nine essential

categories of e-commerce

B2B e-commerce may rely on secure industry exchanges for procuring

goods and services, or Web trading portals that allow only
registered customer’s access to trading information and
applications. Other security processes protect the resources of
c-commerce sites from threats such as hacker attacks, theft of
passwords or credit card numbers, and system failures. We
discuss many of these security threats and features.

Profiling and Personalizing:

52
Once you have gained access to an e-commerce site, profiling
processes can occur that gather data on you and your website
behavior and choices, and build electronic profiles of your
characteristics and preferences. User profiles are developed
using profiling tools such as user registration, cookie files,
website behavior tracking software, and user feedback. These
profiles are then used to recognize you as an individual user
and provide you with a personalized view of the contents of the
site, as well as product recommendations and personalized
Web advertising as part of a one-to-one marketing strategy
Profiling processes are also used to help authenticate your
identity for account management and payment purposes, and
to gather data for customer relationship management,
marketing planning, and website management. Some of the
ethical issues in user profiling are discussed in Chapter 13. See
Figure 9.5.

53