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 MIS201
Fundamentals of
Information Systems
Week 9 Enterprise Systems: ERP, CRM, and SCM

M. Murat Albayrakoğlu
Agenda
• Fundamental concepts
• Transaction management systems (TPS)
• Systems integration
• Departmental systems
• Enterprise resource planning (ERP) systems
• Customer relations management (CRM) systems
• Supply chain management (SCM) systems
Learning Objectives
1. Define TPS
2. Understand the definition and scope of system integration
3. To learn the departmental systems used in businesses and to
understand their functions
4. To learn the role, architecture and importance of ERP systems
5. To learn the structures and functions of CRM and SCM systems
Fundamental Concepts
Transactions
Transaction processing
Transaction processing systems
Systems integration
Transaction Processing
• Collection of data on certain business activities
• Legally required records
• Data stored in databases
• Examples
• Customer orders
• Purchase orders
• Bills
• Payments
• Inventory transactions
• Employee entry and exit times
• Etc.
Transaction Processing
• Collection of data on certain business activities
• Legally required records
• Data stored in databases
• Examples
• Customer orders
• Purchase orders
• Bills
• Payments
• Inventory transactions
• Employee entry and exit times
• Etc.
Transaction Processing Systems
(TPSs)
• Transaction data
• Routine
• Detailed
• Large amount
• Transaction processing activities
• Data collection
• Data organization
• Data correction
Data Process data Information
• Data processing
• Data storage
• Data sharing
• Report generation
ACID Characteristics of TPSs
• Database transaction
• Changes the state of a database
• Reads or modifies the contents of a database
• Describes a business transaction in a database
• ACID characteristics
• Atomicity
• Transaction must be complete
• Consistency
• Database must be consistent before and after the transaction
• Isolation
• Simultaneous transactions must take place without intervening with each other
• Durability
• A transaction must stay the same if the system fails
Data Processing in TPSs
• Batch processing

Create Batch Process

Batch Output
batch Batch batch
Data

• Online transaction processing (OLTP)

Process
Output
data
Data
Systems Integration
• External integration
• Islands of automation
• Partial integration
• Complete integration
• Centralized integration
• Cloud-based integration
• Internal integration
• Structural integration
Islands
of
Automation
Partial
Integration
Full
Integration
Centralized
Integration
Cloud-Based
Integration

* Integration platform
as a service
Structural
Integration
Departmental Systems
Information systems for accounting and finance department
Information systems for marketing and sales department
Information systems for manufacturing and logistics department
Information systems for human resources department
Information Systems for
Accounting and Finance Department
• Transaction management • Budgetary control
• Ledger and account management • Quarterly and monthly budget targets
• Multiple currencies • Quarterly and monthly budget
performance
• Automatic expense management
• Analysis of variance
• Virtual closures
• Accounting audit
• Financial planning and budgeting
• Internal audits
• Financial forecasting
• External audit preparations
• Pro forma financial statements
• Analysis of financial ratios
• Investment management • Payroll
• Decision support for investments • Wages and salaries
• Investment portfolio management • Other financial benefits
Information Systems for
Marketing and Sales Department

• Customer relationship We will study the

• Customer profiling and preference analysis details while we are
• Sales force automation discussing CRM
Information Systems for
Manufacturing and Logistics Department
• Materials requirement planning (MRP)
• Manufacturing resource planning (MRP II)
• Logistics management
• JIT: just-in-time systems
• Computer-aided design (CAD)
• Computer-aided engineering (CAE)
• Computer-aided manufacturing (CAM)
• Product lifecycle management (PLM)
Information Systems for
Human Resources Department
• Hiring • Education
• Finding candidates • Education planning
• Examinations • Online trainings
• Preselection • Assessment and evaluation
• Employee records • Social benefits
• Vacation
• Social security benefits
• Absenteeism
• Private pension
• Promotion
• Private health insurance
• Discipline
• Performance evaluation • Career planning and development
• Periodic evaluation of subordinates by • Self assessment
superiors • Organization evaluation
• Periodic evaluation of • Career path
superiors by subordinates
ERP
Enterprise Resource Planning
(ERP)
• Central database
• Modules with different functionalities that can work seamlessly with
each other
• Data comes from the headquarters and branches
• A record kept for one process is accessible to other processes at the
same time
• Three- or four-tier client-server architecture
ERP Client-Server Internet browsers

Architecture
Desktop clients or terminal emulators Web server

Application servers Application servers

Database server Database server

Three-Tier Architecture Four-Tier Architecture

A Typical ERP
Application
 Industry-Specific ERP
Applications (by SAP)
• Aerospace and Defense • Fashion • Oil, Gas, and Energy
• Agribusiness • Federal, National, and Central • Passenger Travel and Leisure
• Automotive Government • Professional Services
• Healthcare
• Banking • Real Estate
• High Tech
• Building Materials • Regional, State, and Local
• Higher Education and Research Government
• Cargo, Transportation, and
Logistics • Industrial Manufacturing • Retail
• Chemicals • Insurance • Sports and Entertainment
• Consumer Products • Life Sciences • Telecommunications
• Defense and Security • Media • Utilities
• Engineering, Construction, and • Mill Products • Wholesale Distribution
Operations • Mining
ERP Projects
• Implementation approaches
• Vanilla approach
• The processes of the ERP solution provider are adopted exactly
• Customization (chocolate) approach
• The solution provider's ERP solution is fully tailored to corporate processes
• Hybrid approach = Vanilla + Customization
• ERP solution partially adopted to enterprise processes
• The best of the breed approach
• The best modules are sourced from different software houses and integrated in-house
• Certified 3rd party solutions
• ERP solution provider certifies modules of some software houses
• There is no integration problem.
• Durations
• From a few months to several years
• Budgets
ERP Advantages and
Disadvantages
• Advantages
• Increased organizational flexibility
• Increased organizational agility
• Decision support for management
• Supply of quality goods and services to internal and external customers
• Productivity increases
• Disadvantages
• The need for extensive organizational change
• Large and complex systems
• Expensive
• Projects take a long time
Success Factors for ERP Projects
• Full and visible support of the top management throughout the
project
• Involving employees in the project process
• Providing users with adequate and quality training
• Allocating sufficient time and budget to the project
• Completion of data transformations and testing before
implementation
Acquisition of ERP Solutions
• Open source
• Examples: ApacheOFBiz, Compiere, EasyERP, ERPNext, Odoo etc.
• Proprietary (licensed) software
• Examples: SAP, Oracle, Intuit, Microsoft, Sage, etc.
• Cloud applications
• Based on software-as-a-service (SaaS) model
• Examples: Blackbaud, Intuit, Odoo, Oracle, RealPage, Reybex, SAP, WebERP,
etc.
 ERP Software Market Shares
(2023)

Market size in 2023: USD 71.41 billion

Market size in 2032: USD 238.79 billion
Demand for ERP Modules (2021)
ERP Usage Among Industries
(2021)
Advantages and Disadvantages of
Cloud-Based ERP Applications
• Advantages
• Can be used from anywhere with an internet connection
• No need to invest in software and hardware at the start
• As the business volume grows or as stakeholders and processes
vary, system scale can be increased. New modules can be added.
• Disadvantages
• Security issues may arise
• The customer cannot establish full control over this strategically
important system.
• If there is a problem, its solution may be delayed.
 ERP-versus-ERP II*

Core
SCM CRM
ERP

* Also called extended resource planning (XRP)

CRM
Customer Relationship
Management (CRM)
• CRM definition by Gartner:
• Customer relationship management (CRM) is a business strategy
that optimizes revenue and profitability while promoting customer
satisfaction and loyalty. CRM technologies enable strategy, and
identify and manage customer relationships, in person or virtually.
CRM software provides functionality to companies in four
segments:
• Sales
• Marketing
• Customer service and
• Digital commerce
CRM Process Potential customers

Customer churn Customers

Loyal repeat customers

High-value
repeat
customers
Customer Support and
Segment
acquisition resell
Low-value
repeat
customers
Customer Touchpoints
Physical Virtual

• Malls • Smart phones

• Branches • Computers
• Service centers • Call centers
• Sales representatives • Chat apps
• Field technicians • Chatbots
• Fairs • Email
• Cultural activities • Social media
CRM Categories
• Strategic CRM
• Customer-focused core strategy
• Aimed at acquiring and retaining profitable customers
• Operational CRM
• Automation of customer-facing processes
• Marketing
• Sales
• Support
• Analytic CRM
• Using customer data for strategic and tactical purposes
• Developing insights to understand customers better and to connect to customers
more effectively
Customer-Facing CRM Solutions
• Customer-facing solutions
• Call centers Applications directly
• Outbound telesales interact with customers
• Inbound teleservices
• Live chat
• Sales force automation
• Product information system
• Sales forecasting system
• Link tracking system
• Contract management system
• Sales
• Cross selling – selling related products
• Upselling – selling a better and more expensive product
• Bundling – combine several products in a single package
Customer-Touching CRM
Solutions
• Product search
• Product comparison
• Technical support
• Information support
• Customized goods and services Applications indirectly affect
customer experiences
• Personalized Web pages
• Frequently asked questions (FAQs)
• E-mail and auto-reply applications
• Loyalty programs
Analytic CRM Solutions
• Campaign management
• Setting campaign goals
• Campaign design
• Campaign execution
• New customer acquisition
• Sales increase
• Cross selling
• Upselling
• Bundling
• Contribution to new product and service design
• Determining customer acquisition costs
• Analysis of customer profitability
Acquisition Methods for CRM
Solutions
• Open source
• Examples: Bitrix24, HubSpotCRM, Insightly, Odoo CRM, SuiteCRM, Zoho CRM,
etc.
• Proprietary software
• Examples: Adobe, Genesys, Microsoft, Oracle, SAP, etc.
• Cloud applications
• Based on software-as-a-service (SaaS) model
• Examples: Adobe, Microsoft, Oracle, SAP, Salesforce.com, etc.
 CRM Software Market Shares
(2023)

Market size in 2023: USD 142.72 billion

Market size in 2028: USD 281.21 billion
SCM
 Supply Chain
Forward supply chain
Product, service and information flow

Raw materials Parts Component

Assembly Distribution Customer
production manufacturing manufacturing

Order, information, payment, return flow

Reverse supply chain

Raw materials Parts Component
Assembly Distribution Customer
production manufacturing manufacturing
 Upper Supply Chain Lower Supply Chain
Supply Side Distribution Side
Supplier Customer

Supplier Supplier Retailer Customer

Supplier Supplier Supplier Wholesaler Retailer Customer

Supplier Supplier Supplier Firm Wholesaler Retailer Customer

Supplier Supplier Supplier Wholesaler Retailer Customer

Supplier Supplier Retailer Customer

Supplier Customer

3rd Tier 2nd Tier 1st Tier 1st Tier 2nd Tier 3rd Tier
 Firm: Internal Supply Chain

Primary (value-adding) activities of a firm

Inbound Production Outbound Marketing After-sale

logistics processes logistics and sales services
Supply Chain Problems
• Bullwhip effect
Inventory levels

Supplier Firm End customer

• Returns
• Product return from any tier on the distribution side
Bullwhip Effect
• Information asymmetry: The lack of information about one
or more other points of the supply chain
• Small changes in end-customer demand on the distribution
side cause large reactions along the upper tiers
• Excessive stocks accumulate over the supply chain
• Production capacity is used inefficiently
Returns

Repair

Improvement Customer
Renovation Other channels
Return
 Disassembly  Storage
Remanufacturing Elimination

Recycling
Solutions to Supply Chain
Problems
• Just-in-time (JIT) production
• Zero inventory
• Information sharing
• Bullwhip effect
• Returns
• Vendor-managed inventory (VMI)
• Direct delivery of products to store shelves by suppliers
• Maintenance, repair, and operations (MRO)
• Materials and services that are not directly used in manufacturing
• Management of maintenance and repair operations and inventories of MRO
materials
Supply Chain Management
(SCM)
• Three phase cycle
1. Planning Planning
Demand planning, production planning
and procurement planning
2. Execution
Procurement, storage and distribution of
goods and services
3. Analysis
Analysis and summarization of execution Analysis Execution
results and lessons learned
• Functionality of an SCM solution should
cover all three phases of SCM
Modules of SCM Solutions
• Procurement planning
• Oder and sale management
• Demand management
• Procurement management
• Warehouse and inventory management
• Production management
• Logistics and transportation
• Arrivals
• Shipments
• Maintenance and repair management
Acquisition Methods for SCM
Solutions
• Open-source solutions
• Examples: Check the following link:
https://www.goodfirms.co/blog/free-open-source-supply-chain-management
-software

• Proprietary solutions
• Examples: Blue Yonder (JDA Software), Coupa, Descartes Systems Group,
e2open, Infor, Jagger, Manhattan Associates, Oracle, SAP, Wise Tech Global,
etc.
• Cloud-based solutions
• Based on software-as-a-service (SaaS) model
• Examples: Accenture, Blue Yonder (JDA Software), HighJump, IBM
Corporation, Infor, Kinaxis, Logility, Manhattan Associates, Oracle, SAP SE, etc.
 SCM Software Market Shares
(2023)

Market size in 2023: USD 71.41 billion

Market size in 2033: USD 194.3 billion
 e !
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 Calendar

Introduction to the course, systems approach and IS Telecommunications and the Internet
Business information systems in your career Securing IS
Global e-business and collaboration Enterprise applications
Achieving competitive advantage with IS E-commerce: Digital markets, digital goods
Ethical and social issues in IS Decision making and artificial intelligence
IT Infrastructure: Hardware and software Making the business case for IS and managing projects
Databases and business intelligence Making the business case for IS and managing projects
Midterm Exam Final Exam
Next Week
• Topic
• E-commerce, digital markets, and digital goods
• Reading
• Ch. 10 from EMIS14E
• Quiz
• Quiz 9: E-commerce, digital markets, and digital goods
• DataCamp courses and tracks
• Please be sure that you learned the rules that apply to get the statements of
achievement
• Be sure that you still remember those rules
• Keep up the good work
Q&A

?
Thank you! Have a good week!