Extended Systems

Tool to integrate enterprise across its

business functions as well as with
outside business partners to manage the
enterprise resources efficiently.
Vendors Enterprise
. Dept1
. Dept2.
Customers
Extended Systems
Customer Relationship Management (CRM)
Supply Chain Management (SCM)
e-Commerce applications
Business Intelligence components (e.g. Data
warehouse, Data Mining tools)
Advanced Planning & Scheduling (APS)
applications
Extended Systems
CRM allows organizations to manage up-front
opportunities
APS provides the tools needed to optimize
resources and keep supply and demand in sync
Business intelligence and analytical applications
deliver access to strategic information and
corporate guidance
SCM allows organization to maintain optimum
level of inventory at all levels.
Extended ERP
Further, enabling technologies like ERP II have led to the
advent of Collaborative ERP (cERP).
cERP is a cohesive framework to facilitate information
exchange for doing business. It is applied across the
extended enterprise using e-business solutions.
While ERP vendors are building or acquiring applications
in these categories, in many cases, Best-of-Breed
software vendors lead this segment.
ERP vs. Extended System
Element ERP Extended System
Role
Enterprise optimization Value chain participation/ c-
commerce enablement
Domain
Manufacturing and distribution All sectors/ segments
Function
Manufacturing, sales, finance, HR Cross-industry, industry sectors
and specific industry processes
Process
Internal, hidden Externally connected
Architecture
Web-aware, closed, monolithic Web-based, open,
componentized
Data
Internally generated and consumed Internally and externally
published and subscribed
SCM
SCM - involves the management of information flows
between and among stages in a supply chain to
maximize total supply chain effectiveness and
profitability
SCM can bring following effects:
Channel Integration
Speed up product development life cycle
Product life cycle management
Supply Chain Management Systems
Supply Chain Management (SCM)

Close linkage and coordination of activities involved
Close linkage and coordination of activities involved
in buying, making, and moving a product
in buying, making, and moving a product

Integrates supplier, manufacturer, distributor, and
Integrates supplier, manufacturer, distributor, and
customer logistics time
customer logistics time

Reduces time, redundant effort, and inventory costs
Reduces time, redundant effort, and inventory costs

Network of organizations and business processes
Network of organizations and business processes

Helps in procurement of materials, transformation of
Helps in procurement of materials, transformation of
raw materials into intermediate and finished products
raw materials into intermediate and finished products

Helps in distribution of the finished products to
Helps in distribution of the finished products to
customers
customers

Includes reverse logistics
Includes reverse logistics
-
-
returned items flow in the
returned items flow in the
reverse direction from the buyer back to the seller
reverse direction from the buyer back to the seller
Supply Chain Management (SCM)
Information from Supply Chain
Management Systems helps firms:
Decide when and what to produce, store, and move Decide when and what to produce, store, and move
Rapidly communicate orders Rapidly communicate orders
Track the status of orders Track the status of orders
Check inventory availability and monitor inventory levels Check inventory availability and monitor inventory levels
Information from Supply Chain
Management Systems helps firms:
(Continued)
Reduce inventory, transportation, and warehousing costs Reduce inventory, transportation, and warehousing costs
Track shipments Track shipments
Plan production based on actual customer demand Plan production based on actual customer demand
Rapidly communicate changes in product design Rapidly communicate changes in product design
Components of SCM
Supply Chain Management systems can be divided into
three components:
Supply Chain Planning (SCP)
Supply Chain Execution (SCE)
Collaborative Planning (CP)
Components of SCM
Supply chain planning optimizes the planning for
balanced supply even for varied demands. The key
activities of SCP are:
Supply Chain Network Design
Demand Planning & Forecasting
Supply Planning
Distribution Planning and
Manufacturing Planning & Scheduling
Components of SCM
Supply chain execution is responsible for timely
execution for buying, moving, making and
ordering. Activities of SCE include:
Warehouse Management
Transportation Management
Inventory Management
Order Management
Components of SCM
Similarly Collaborative Planning facilitates the
collaboration among participants. The key
activities of CP are:
Design Collaboration
Demand Collaboration
Procurement Collaboration
Retailer Collaboration
Benefits of SCM
According to general industry survey by i2 technologies,
average quantified range of SCM benefits are:
Increase customer service 5% to 15%
Increase throughput 2% to 5%
Reduce operating expenses from 10% to 50%
Reduce logistics spend 5 20%
Reduce inventory (raw, WIP, FG) 10% to 25%
Reduce planning cycle times 70% to 95%
Reduce order lead times 10% to 40%
Reduce production lead times 10% to 50%
ERP vs. SCM
There are three fundamental limitations of ERP systems as
they simply lack the advanced planning tools:
Execution focus: ERP systems were only transaction
processing, data collection, and data reporting.
Poor Flexibility: Only sequential planning.
One-Dimensional Planning: ERP planning
methodologies is sequential in nature, which makes
them unable to consider multiple constraints
simultaneously.
ERP vs. SCM
ERP SCM
Comprehensive Covers many more areas
than SCM
Relatively less
Complexity Highly complex Relatively less complex
Sourcing tables Relatively static Dynamic
Handling of
constraints
In a ERP system, all the
demand, capacity and
material constrains are
considered in isolation of
each other
Simultaneous handling of
the constraints
Functionality Relatively less dynamic as
they are mainly concerned
with transaction processing
and have more number of
jobs to do
Can perform simulations of
adjustments with regard to
the constraints dynamically
in real-time
ERP SCM
Speed of
processing
requests
Relatively slower Faster
Planning Sequential and
enterprise centric
Concurrent and
collaborative
Environment Push environment
(power with
manufacturers)
Pull environment (power
with consumer)
Supply chain Made-to-stock Hybrid (Made-to-stock,
Made-to-order)
Inventory
Management
Managed within
enterprise or pushed to
suppliers
Collaborative inventory
management over value
chain
CRM
Some definitions of CRM are:
A way to identify, acquire, and retain customers.
A way of automating the front office functions of sales,
marketing, and customer service.
A technology-enabled business strategy whereby
companies leverage increased customer
knowledge to build profitable relationships, based on
optimizing value delivered to and realized from their
customers.
Key CRM principles
1. Differentiate Customers
Recognize and reward best customers.
Differentiate between a high value customer and a low value customer
2. Keeping Existing Customers
By identifying customers for different levels of satisfaction thus enabling to
improve customer satisfaction levels and scores.
3. Maximizing Life time value
Identifying life stage and life event trigger points by customer, and hence
maximize purchase potential by exploiting up-selling and cross-selling.
4. Increase Loyalty
Learning from customers and prospects, Creating value, Creating
loyalty
CRM Formation Process
3 important decision areas:
Defining the purpose of engaging in CRM
Selecting parties (or customer partners) for
appropriate CRM programs
Developing programs (or relational activity
schemes) for relationship engagement with the
customer.
CRM Purpose
These objectives could be specified as:
Financial goals
Marketing goals
Strategic goals
Operational goals, and
General goals
Relational Parties
decide on the:
type of customer type,
any specific customers
or customer groups
in focus for their CRM initiative.
CRM Programs
There are three types of CRM programs:
Continuity marketing
implemented by membership and loyalty card programs where
customers are often rewarded for their member and loyalty
relationships with the marketers
One-to-one marketing
Primarily in case of B2B
Partnering programs
In the mass markets, two types of partnering programs are most
common: co-branding and affinity partnering.
Types of CRM
Operational CRM- automation to the basic business
processes like marketing, sales, service, etc.
Analytical CRM- support to analyze customer
behavior, implements business intelligence alike
technology
Collaborative CRM- ensures the contact with
customers (phone, email, fax, web, sms, post, in
person)
Types of CRM
Operational CRM
Operational CRM involves 3 general areas of business:
1. Sales force automation (SFA) : It automates critical sales and sales force
management functions, for example:
lead/account management, contact management, quote management,
forecasting, sales administration, keeping track of customer preferences,
buying habits, customer demographics, and Sales staff performance.
2. Customer service and support (CSS) : It automates:
service requests, complaints, product returns, information requests, internal
help desk, inbound call-center support for customer inquiries
It uses multiple channels (Web, phone/fax, face-to-face, kiosk, etc) using
computer telephony integration (CTI).
3. Enterprise marketing automation (EMA): with an objective to improve
marketing campaign efficiencies, it provides information about:
Business environment, Competitors trends, Industry trends, and Macro environmental
variables
Analytical CRM
Here the customer data is analyzed to
segment customers and identify cross- and
up-selling potential.
Collaborative CRM
The process brings people, processes and
data together so companies can better
serve and retain their customers. It
facilitates interactions with customers
through all channels (personal, letter, fax,
phone, web, e-mail) and supports co-
ordination of employee teams and
channels.
Technological Tools for CRM
Some of the key technological tools required to
run a CRM application are:
Electronic Point of Sale (EPOS)
Sales Force Automation tools
Customer Service Helpdesk
Customer database
Call Centers
Systems Integration
Systems Integration
ERP and CRM both are enterprise wide IT application. The
basic difference between the two is:
ERP is back office automation solution, whereas CRM is a front
office automation solutions,
If ERP automates various business functions of production,
finance, inventory, order fulfillment and human resource giving
an integrated view of business,
then CRM automates the relationship with customer covering
contact and opportunity management, marketing and product
knowledge, sales force management, sales forecasting,
customer order processing and fulfillment, delivery, installation,
pre-sale and post-sale services and complaint handling by
providing an integrated view of the customer.
CRM and Related Concepts
CRM and SCM
ERP and CRM
Data Mining for CRM
Data warehouse and CRM
CRM at ICICI
ICICI, set up as a Development Bank over four
decades ago to provide products and services
for the corporate segment
Diversified into the retail segment of the financial
markets in the early 1990s.
In 1994, it established ICICI Bank as a
commercial bank
the retail initiatives include
Prudential ICICI AMC-a tie up with the Prudential Group of UK for its foray
into the mutual funds business,
ICICI Personal Financial Services (PFS)-to offer retail asset products like
home finance, automobile finance, durables finance, etc
ICICI Capital Services-to service retail liability products like bonds and
deposits
ICICI Web trade-to facilitate end-to-end integrated web based trading
service through the web site www.icicidirect.com
Prudential ICICl Life Insurance-to offer life insurance services, and
ICICI Lombard General Insurance-the latest venture to offer non-life
insurance services
Other web based business
City portals and various other utility sites
such as:
Bill junction. com,
icicimoneymanager.com
magiccart.com, etc.
THE CRM ROADMAP
a set of discrete software technologies, which
will focus on automating and improving the
business processes associated with managing
customer relationships
the coordination of multiple business functions
coordinate multiple channels of communication
with the customer-face to face, call center, ATM,
web, telephone, kiosk, bank, branch, sales
associates, etc
IMPLEMENTING CRM
CRM Business Transformation Map based
on five inter-related areas
Business Focus
Organizational Structure
Business Metrics
Marketing Focus
Technology
SELECTING AND IMPLEMENTING A
TECHNOLOGY BASED SOLUTION
The success of the CRM initiatives was
contingent on various decisions pertaining
to technology
Some of the key issues were:
a) Make or Buy
The criteria set included the following:
Functionality
Flexibility in incorporating changes
Scalability-with growth
Fit with existing architecture (legacy systems)
Fit with global best practices
Upgradability--which basically means that if the
technology that enables CRM advances tomorrow,
the installed system should be able to take into its fold
the in-creased functionalities
Commercial impact-evaluated in terms of the life
time of the solution
From whom to buy
criteria was drawn to shortlist the prospective product providers. This
included:
CRM expertise
Retail finance expertise,
Implementation worldwide especially in Asia Pacific
Company focus on CRM (specially important in the context of
many large, ERP providers having moved: into the CRM space in
recent times)
Credentials including financials, client list, life history, etc
Understanding of ICICl's pain points to gauge how well they have
been able to comprehend ICICl' s pressing needs and their views on
whether the product con-cerned could provide a long-term solution
Preferred implementation partners.
Request for Information (RFls)
After receiving the RFls, another round of
evaluation was done on the basis of :
CRM solution implementation experience
Clientele (specially in Asia Pacific), scope and
scale of implementation
Understanding of ICICl's experience
Suggested solution including implementation
time line
Technical handholding expected
Training and maintenance
After short-listing two product vendors and
system integrators, reference calls were
made to several of the past clients of all
the short listed companies.
All processes were mapped on to product
by understanding the details.
LESSONS SO FAR FROM THE
ICICI EXPERIENCE
CRM is difficult because it is an enterprise-
wide initiative.
CRM is not a technology initiative. Many
have confused CRM as a technology
initiative, and assigned the CRM
implementation project to their information
system or IT group.
CRM is not exclusively a marketing
initiative.
CRM is not exclusively a sales initiative.
CRM is not exclusively a service initiative.
CRM involves marketing, sales, service
and technology, as well as the other inner-
workings of an organization.
Process Integration Blurs the Application
Lines
CRM
CRM
ERP
ERP
SCM
SCM
Prospect to Cash Process
Prospect to Cash Process
1. Log Activity
1. Log Activity 1. Log Activity
2. Log Opportunity
2. Log Opportunity 2. Log Opportunity
3. Check for contract
3. Check for contract 3. Check for contract
4. Check Inventory
4. Check Inventory 4. Check Inventory
5. Check ATP/CTP
5. Check ATP/CTP 5. Check ATP/CTP
7. Quote Customer
7. Quote Customer 7. Quote Customer
8. Create Quote
8. Create Quote 8. Create Quote
9. Generate Order
9. Generate Order 9. Generate Order
12. Plan and
Produce
12. Plan and 12. Plan and
Produce Produce
13. Send ASN
13. Send ASN 13. Send ASN
14. Ship
14. Ship 14. Ship
15. Invoice
15. Invoice 15. Invoice
16. Apply Payment
16. Apply Payment 16. Apply Payment
6. Determine Price
6. Determine Price 6. Determine Price
EAI
EAI EAI
EAI
EAI EAI
10. Check Credit
10. Check Credit 10. Check Credit
11. Confirm Order
11. Confirm Order 11. Confirm Order
Prospect to Cash Process
Prospect to Cash Process
CRM
CRM
ERP
ERP
SCM
SCM
1. Log Activity
1. Log Activity 1. Log Activity
2. Log Opportunity
2. Log Opportunity 2. Log Opportunity
3. Check for contract
3. Check for contract 3. Check for contract
4. Check Inventory
4. Check Inventory 4. Check Inventory
5. Check ATP/CTP
5. Check ATP/CTP 5. Check ATP/CTP
7. Quote Customer
7. Quote Customer 7. Quote Customer
8. Create Quote
8. Create Quote 8. Create Quote
9. Generate Order
9. Generate Order 9. Generate Order
12. Plan and
Produce
12. Plan and 12. Plan and
Produce Produce
13. Send ASN
13. Send ASN 13. Send ASN
14. Ship
14. Ship 14. Ship
15. Invoice
15. Invoice 15. Invoice
16. Apply Payment
16. Apply Payment 16. Apply Payment
6. Determine Price
6. Determine Price 6. Determine Price
10. Check Credit
10. Check Credit 10. Check Credit
11. Confirm Order
11. Confirm Order 11. Confirm Order
ERP II ERP II
Package Package
Extended ERP Components
Business intelligence - information that
people use to support their decision-
making efforts
- Data Warehousing
- Data Mining
Data Warehouse
Data Warehouse is a single, complete and consistent
store of data obtained from a variety of different sources
made available to end users in a way they can understand
and use in a business context. It is
Subject oriented
Integrated
Non-volatile
It is used primarily in organizational decision making
ERP
ERP and Data Warehouse
ERP vs. Data Warehouse
OLTP (ERP) Data Warehouse
Application oriented Subject oriented
Used to run business Used to analyze business
Detailed data Summarized and refined
Current up to the date Snapshot data
Isolated Data Integrated Data
Repetitive access Ad-hoc access
Clerical user Knowledge users (Manager)
Performance sensitive Performance relaxed
Few records accessed at a time Large volume accessed at a time (millions)
Read/update access Mostly read (Batch update)
No data redundency Redundancy present
Database size 100 MB 100 GB Database size 100GB few terabytes
Transaction throughput is performance
metric
Query throughput is performance metric
Thousands of users Hundreds of users
ERP and Data Warehouse
Data Marts
Data Marts is a small version of Data Warehouse, defined from large
Data Warehouse and are departmentally or individually structured. It
is a temporary storage of data possibly from multiple sources and is
meant for specific needs.
Product Use Duration Granularity
Data Warehouse Repository Permanent Finest
Data Mart Specific study Temporary Aggregate
OLAP Report & Analysis Repetitive Summary
ERP and Data Mining
Data Mining It is the use of algorithms to extract the
information and patterns from various data.
It is meant for analysis of large quantities of data.
ERP
Advantages of Data Mining in ERP
applications
Market segmentation
Customer churn
Fraud Detection
Interactive Marketing
Market Base Analysis
Trend Analysis
Challenges in establishing Data Warehouse
Large time is consumed in extracting, cleaning and
loading the data
Problems with system in feeding data warehouse
Need to validate the data not checked by OLTP
High maintenance system
Security requirements are different from OLTP
Training users is complex exercise. Warehouse users
may develop conflicting business rules
Overhead can eat up great amount of disk space.
Resource optimization is generally neglected.
Integrating Extended ERP
Components
Enterprise Application Integration (EAI) products/tools
can be applied for integration of these systems.
EAI acts as an glue between ERP, CRM, SCM, Data
Warehouse and establish a rapid integration framework.
EAI tools are comprised of process management,
application interface, transformation, and messaging
service necessary to facilitate end-to-end application
integration both internally and externally to the enterprise.
ERP
Data
Warehouse
CRM
Legacy
Trading
Partners
Supply
Chain
Extend your business processes throughout your enterprise and
beyond...
Enterprise Application
Integration (EAI)