Chapter 7 Transaction Processing, Functional Applications, CRM, and Integration

1. Chapter 7Transaction Processing, Functional Applications, CRM, and Integration

2. A/R • A/P • Payroll • General Ledger • Compensation • Vacation • Skills/Training Human Resources Accounting • Receiving • Fulfillment • Process control • Purchasing • Cash Management • Asset Management • Budgeting Business Functions Operations Financing • Retail Pricing • Sales Promotions • Sales Force Management. • Customer Loyalty • Interactive Marketing • Order Taking • CRM • Self-service Sales Marketing Functional Areas in a Business

3. Functional Information Systems • Traditionally, ISs were designed within each functional area to increase their internal effectiveness & efficiency. • This may not suit some organizations, because certain processes may involve activities that are performed in several functional areas. • Solution 1: Reengineer the organization. • Ex.: the company can create cross-functional teams, each responsible for performing a complete business process • Solution 2: The integrated approach • Keeps the functional departments but creates a supportive information system to help communication, coordination, and control. ==> Cross functional boundaries

4. Functional Areas–Supply Chain Perspective The supply chain is a business process that links all the procurement from suppliers, the transformation activities inside a firm (the value chain) and the distribution of goods or services to customers via wholesalers and retailers.

5. Major Characteristics of Functional ISs • Composed of smaller systems • A functional IS consists of several smaller information systems that support specific activities performed in the functional area • Integrated / independent systems • The specific IS applications in any functional area can be integrated to form a coherent departmental functional system, they can be integrated across departmental lines to match a business process or be completely independent. • Interfacing • Functional information systems may interface internally with each other to form the organization-wide information system or externally systems outside the organization • Supportive of different levels • Information systems applications support the three levels of an organization’s activities: operational, managerial, and strategic

6. A model of IS in the production/operations functional area

7. Functional Information Systems Data Analysis and statistical forecasting. Datamining ops that support management Dynamic and what-if features. Integrated Clerical documents, schedules, mail, manuals, etc. Back office administrative tasks and ops. Business transactions, events and processes. Support of the business and customers. Operation Level of the company is normally highly structured and predefined. Run The Company

8. Transaction Processing System (TPS) • Overview • the backbone of an organization’s information systems • supports transaction processes • monitors, collects, stores, processes, and disseminates information for all routine core business transactions • includes accounting and finance transactions and some sales, personnel, and production activities • These data are input data to functional information systems applications, DSS, and CRM • Computerization of routine transaction processes

9. Objectives of TPS • Primary goal of TPS • to provide all the information needed by law and/or by organizational policies to keep the business running properly and efficiently. • Specific objectives of a TPS • to allow for efficient & effective operation of the organization • to provide timely documents and reports • to increase the competitive advantage of the corporation • to provide the necessary data for tactical & strategic systems, such as Web-based applications • to ensure accuracy & integrity of data & information • to safeguard assets & security of information

10. Major characteristics of TPS • Large amounts of data are processed. • The sources of data are mostly internal. • TPS processes information on a regular basis. • Large Storage capacity is required. • High processing speed is needed due to the high volume. • TPS basically monitors and collects past data. • I/O data are structured. • High level of detail is usually observable. • Low computation complexity. • A high level of accuracy, data integrity, and security is needed. • High reliability is required. • Inquiry processing is a must.

11. Activities of TPS • First, data are collected & entered into the computer via any input device. • 3 ways that the system processes data • Batch processing • the firm collects data from transactions as they occur, placing them in groups or batches. The system then processes the batches periodically • Online processing • data are processed as soon as a transaction occurs. • Hybrid system (a combination of batch & online processing) collects data as they occur but process them at specified intervals.

12. The flow of information in transaction processing

13. Web-based & Online TPS • OLTP (online transaction processing) - Client / server systems • OLTP and Web technologies, suppliers can look at the firm’s inventory level or production schedule in real time • responsibility for inventory management and ordering • Interactive Internet TPS • expands OLTP to provide enhanced real time transaction processing over the Internet or intranets • Internet transaction processing • Flexibility to accommodate unpredictable growth • Cost effectiveness • Interactive automatic billing • Timely search • Multimedia data • High data throughput to support queries requiring massive file size • Fast response time • Effective storage

14. Typical Tasks in TPS • Order processing • The ledger • Accounts payable and receivable • Receiving and shipping • Fixed assets management • Payroll • Personnel files and skills inventory • Government reports • Periodic reports and statements

15. Innovative IT Applications in the Functional Areas • Managing production/operations and logistics • POM - The production and operations management • transform inputs into useful outputs • very diversified, and so its supporting IS(s) • related to finance and sales, engineering and design, and purchasing and logistics • Managing marketing and sales • Managing the accounting and finance systems • Managing human resource systems

16. POM functions

17. In-house logistics & materialmanagement • Logistics Management • deals with ordering, purchasing, inbound logistics (receiving), and outbound logistics (shipping) activities. • All of these activities can be supported by ISs • E-procurement • Inventory management • determines how much inventory to keep • when to order – reorder point • how much to order • Three costs play important roles in inventory decisions • cost of maintaining inventories • cost of ordering (a fixed cost per order) • cost of not having inventory when needed (the shortage or opportunity cost) • Vendor-managed inventory (VMI) • Quality control

18. Planning Procedures/ Operations • Material Requirements Planning (MRP) • SW that facilitates the plan for acquiring parts, subassemblies, or materials • Manufacturing Resource Planning (MRP II) • connects the regular MRP to other functional areas • MRP + determines the costs of parts and the cash flow needed to pay for parts • Just-in-time (JIT) • an approach that attempts to minimize waste of all kinds and continuously improve processes and systems

19. Planning Procedures/Operations (cont.) • Project management • The characteristics • Most projects are unique undertakings, and participants have little prior experience in the area. • Uncertainty exists due to the long completion times. • There can be significant participation of outsiders, which is difficult to control. • Extensive interaction may occur among participants. • Projects often carry high risk but also high profit potential. • The tools • PERT (Program evaluation and review technique) • Critical path method (CPM) • Work Management Systems (WMS) • automatically manage the prioritization and distribution of work • deal with resource allocation and reallocation

20. CIM-Computer-integrated manufacturing • Definition - a philosophy about the implementation of various integrated computer systems in factory automation • 3 basic goals • Simplification of all manufacturing technologies & techniques. • Automation of as many of the manufacturing processes as possible by the integration of many IT. • Integration and coordination of all aspects of design, manufacturing & related functions via computer HW and SW. • Typical integrated technologies • FMS (Flexible-manufacturing systems), JIT, MRP • CAD (Computer Aided Design) • a system that enables industrial drawings to be constructed on a computer screen & stored, manipulated & updated electronically. • CAE (Computer Aided Engineering) • enables designers to analyze the design and determine whether it will work the way the designer thought it would. • GT - Group technology

21. The CIM model

22. Product Lifecycle Management (PLM) • PLM • is a business strategy that enables manufacturers to control and share product-related data as part of a products design and development efforts. • Web-based supply chains and other technologies are employed to automate this collaborative effort. • This electronic-based collaboration can • reduce product cost • travel expenses • reduce costs associated with product-change management • reduce the time it takes to get a product to market

23. Managing Marketing and Sales • Channel systems - the TPS involved in the process of getting a product or service to customers and dealing with their needs • The customer is king (queen) - customer relations • Telemarketing • Telemarketing has been moving to cell phones, using Short message service (SMS), which consists of messages you can receive on your cell phone. • A telemarketing process can be divided into five major activities, all of which are supported by IT & can be done on the Web, even in a wireless environment. • Advertisement and reaching customers • Order processing • Customer service • Sales support • Account management • Distribution channels & in-store innovations • Distribution channels management • Improving sales at retail stores • Marketing management

24. Channel systems

25. Customer Relations • CRM • Customer Profiles and Preference Analysis • Sophisticated ISs are being developed to collect data on existing and potential customers, their demographics (age, gender, income level), and preferences. • Prospective Customer Lists and Marketing Databases • All firms need to know and track who their existing and potential customers are. • These prospective-customer lists can be analyzed and sorted by classification for direct mailing, e-mailing, or telemarketing. • Mass Customization • Today’s customers prefer customized products. • Through mass customization, the practice of maintaining WIP inventory, manufacturers can offer different product configurations at reasonable prices. • Personalization • Special product offers are made, based on where the customer spent their time and on what they may have purchased. • Advertising and Promotions • Special promotions, coupons are presented to the customer via mails, email, wireless and pervasive computing applications.

26. Distribution Channels & In-Store Innovations • New IT-Supported Distribution Channels • Internet • Location Based Mapping • Self-service convenience stores • Improving Shopping and Checkout at Retail Stores • Hand-held wireless devices that scan the bar code UPC • Smart card or credit card • Information kiosk enable customers to view catalogs in stores • Self-checkout machines • Check-writers attached to cash registers • Computerization of various activities in retail stores • Video-based systems count and track shoppers in a physical store • Distribution Channels Management

27. Marketing Management • Many marketing management decision applications are supported by CBIS. • Some examples • Pricing of Products or Services • Sales volumes are largely determined by the prices of products or services as is profit. • Salesperson Productivity • Sales-force automation - increases salesperson productivity by providing them with mobile devices, access to information • Productivity SW • Profitability Analysis • profit contribution of certain products and services can be derived from cost-accounting systems • Sales Analysis And Trends • Marketing TPS collect sales figures that can be searched for trends and relationships • New Products, Services, and Market Planning • Requires careful analysis, planning, forecasting and Market research. • Web-Based Systems - support marketing and sales through data capture

28. Marketing data Statistical & other models Marketing models Internet usage sales reports market reports Industry reports Government reports News Competition Expert judgements Regression analysis Factor analysis Cluster analysis Discriminant analysis Forecasting Data mining Media mix Site location Product design Advertising budget Web metrics Decision output Marketing evaluation & recommendations Standard Management Science models Corporate knowledge base Linear programming Decision tables Inventory Project management Ec tools Web evaluation Intelligent agents Databases User interface User Marketing decision support

29. An accounting / finance system

30. Managing Accounting & Finance Systems • An accounting/finance IS is responsible for: • Gather raw data necessary for the accounting/finance TPS • Ttransforming the data into information • Making the information available to users • Many packages exist to execute routine accounting transaction processing activities. • Some software packages are integrated, e.g. MAS 90 and MAS 200 • The accounting/finance TPS also provides a complete, reliable audit trail of all transactions transmitted through the network.

31. Accounting & Finance Systems • Financial planning & budgeting • Financial & economic forecasting • Knowledge about the availability and cost of money is a key ingredient for successful financial planning. • Planning for incoming funds • Funds for organizations come from several sources. • Using the information generated by financial and economic forecasts, the organization can build a decision support model for planning incoming funds. • Budgeting • Capital budgeting • Managing financial transactions • Financial and Economic Forecasting • Planning for Incoming Funds • Budgeting • Capital Budgeting

32. Accounting & Finance Systems (cont.) • EC Applications of Financial Transactions • Global stock exchanges & multiple currencies • E-Bonds • Factoring online • Electronic re-presentment of checks • E-bill presentment and payments • Virtual Close • Expense Management Automation • Investment management • Access to financial and economic reports • Financial analysis • Financial value chain management (FVCM) • Control and auditing • Budgetary control & Auditing • Financial health analysis - Financial Ratio Analysis • Profitability analysis and cost control • Product pricing

33. Managing Human Resource Systems • Recruitment • Using the Web for recruitment • Position inventory • Employee selection • HRM Portals and Salary Surveys • Human resource maintenance and development • Performance evaluation • Training and human resource development • Human Resource Planning and Management • Personnel planning • Labor - management negotiations • Payroll and Employees’ Records • Benefits administration • Employee Relationship Management (ERM)

34. Responsible for the workforce

35. Customer Relationship Management (CRM) • CRM • an approach that recognizes that customers are the core of the business and that the company’s success depends on effectively managing relationships with them • focuses on building long-term and sustainable customer relationships that add value both for the customer and the company • Types of CRM • Operational CRM • related to typical business functions involving customer services, order management, invoice/billing, etc • Analytical CRM • involves capture and analysis of customer data • Collaborative CRM • deals with all the communication, coordination, and collaboration between vendors and customers

36. eCRM (electronic CRM) • eCRM (electronic CRM) • started in the mid-1990s • when customers began using Web browsers, the Internet, and other electronic touch points • The use of these technologies made customer services much more effective and efficient than before. • Through these technologies, data generated about customers can be easily supplied to marketing, sales, and customer service applications and analysis. • Scope of eCRM • Foundational services (ex. order fulfillment) • Customer-centered services (ex. order tracking) • Value-added services (ex. online information)

37. CRM

38. CRM in Action • 5 steps in building IT-supported CRM (Seybold and Marshak, 1998) • Make it easy for customers to do business with you. • Focus on the end customer for your products and services. • Redesign your customer-facing business processes from the end customer’s point of view • Wire your company for profit: design a comprehensive, evolving electronic business architecture. • Foster customer loyalty. In e-Commerce, especially, this is the key to profitability. • CRM failures • Failure to identify and focus on specific business problems • Lack of active senior management (non-IT) sponsorship • Poor user acceptance, which can occur for a variety of reasons such as unclear benefits and usability issues • Trying to automate a poorly defined process

39. CRM Activity (Sample) IT Support Information about choice of doctors, hospitals, and alternative medicine offered by HMO’s • Internet; online customer survey • Groupware • Expert systems for giving advice • Customized information & services in many languages • Discounts based on healthy lifestyle • Appointment reminders • Information on doctors • Medical research • Help center to solve HMO member problem • E-mail • Data warehouse for customer information • Data mining • Intelligent translating systems • Search engines on the Web help center • Facilitates help-desk activities • intelligent agents for answering FAQs • Web-based integrated call centers • Quick reply to customers’ inquiries • Workflow software for planning and monitoring • Intranets Monitoring of customers’ orders inside the company • Appointment of account managers • Creation of specialized teams (BPR) • Expert systems for advice • Groupware for collaboration Seminars and educational activities for customers • Online training & Internet CRM Activities and IT Support

40. CRM Activity (Sample) IT Support • Web-based training software • Workflow Self-tracking of shipments and orders Segmenting of customers Data mining in data warehouses Matching customers with products and services Web-based intelligent agents Customizing products to suit customers’ specific needs • Intelligent agents to find what customer wants • CAD/CAM to reduce cost of customization Chat room & Sponsored newsgroups Customer discussion forums • Data warehouses & data mining of customers’ activities • Smart cards that record purchasers’ activities Loyalty programs for repeat customers . Customer participation in product (service) development • Online surveys • Newsgroups & Chat room & e-mail Proactive approach to customers based on their activity level Data warehouse & Data mining CRM Activities and IT Support (cont.)

41. Information Technology in CRM

42. Customer Service • Customer Service on the Web • Providing Search and Comparison Capabilities • Providing Free Products and Services • Providing Technical and Other Information and Service • Allowing Customers to Order Customized Products and Services Online • Letting Customers Track Accounts or Order Status • Tools for Customer Service • Personalized web pages, FAQs, Tracking tools, Chat rooms, E-mail & automated response, Help desks & Call centers, Troubleshooting tools • Justifying CRM programs • Metrics - to determine how much customer service to provide is to compare your company against a set of standards • Metrics to evaluate Web-related customer service • Response time, Site availability, Download time, Timeliness • Security and privacy, Fulfillment, Return policy, Navigability

43. Partner Relationship Management • Partnership Relationship Management (PRM) refers to all of the efforts made to apply CRM to all types of business partners. • Specific functions of PRM applications: • Partner profiles Centralized forecasting • Partner communications  Group planning • Lead management  E-mail/ Web-based alerts • Targeted information distribution  Messaging • Connecting the extended enterprise Price lists • Partner planning  Community bulletin boards

44. Integrating Functional Systems • Reasons for integration • Helps to reduce cost • Helps to increase employees’ productivity • Helps to facilitate information sharing and collaboration which are necessary for improving customer service • IT helps CRM • Enterprise Resource Planning (ERP) and SAP software

45. Integrated IS