Chapter 7 Transaction Processing, Innovative Functional Systems, CRM, and Integration.
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Chapter 7
Transaction Processing, Innovative Functional Systems, CRM, and Integration
Functional Information Systems Traditionally, IS 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 For example, the company can create cross-
functional teams, each responsible for performing a complete business process.
Solution 2: The integrated approach (e.g. Colonial on pg 276). Keeps the functional departments but creates
a supportive information system to help communication, coordination, and control.
Functional Departments and the Value Chain
Characteristics of Functional IS
A functional information system consists of several smaller information systems that support specific activities performed in the functional area.
The specific IS applications in any functional area can be integrated to form a coherent departmental functional system, or they can be completely independent
Functional information systems interface with each other to form the organization-wide information system.
Some organizational information systems interface with the environment.
Information systems applications support the three levels of an organization’s activities: operational, managerial, and strategic.
Transactions Transaction: something is given and something
is received, or there is an exchange Inside/outside transactions
Product is given, cash is received Internal-only transactions
Employee paycheck given, employee labor received Material is withdrawn from inventory, a material
requisition is given Every transaction involving cash or other real
assets is recorded in the TPS, and most lesser transactions (such as an internal transfer of finished products to inventory) also are recorded
It is the TPS that collects, records, stores, processes, and accesses the transactions
Transaction Processing Systems
Transaction Processing Systems (TPS) The information system that support business
processes, mainly accounting & finance transactions, with some sales, personnel, & production activities as well
TPS is the backbone of an organization’s information systems It monitors, collects, stores, processes &
disseminates information for all routine core business transactions.
These data are input data to functional information systems applications, DSS, and CRM
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 Goals of 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
Activities of TPS
First, data are collected & entered into the computer via any input device
The system then processes data in one of the following ways: 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.
Benefits of Web-Based Transaction Processes
Flexibility to accommodate unpredictable growth in processing demand.
Cost effectiveness for small dollar amounts. Interactive, automatic billing, enabling companies
to offer services to anyone, not just subscribers. Timely search and analysis of large databases. Ability to handle multimedia data such as pictures
and sound effectively and efficiently. High data throughput to support inquiries
requiring massive file size. Fast response time. Effective storage of huge graphics and video
databases.
Logistics/Materials/Inventory Management Transaction Systems Very important Handled in OPIM 204
Channel Systems
Channel Systems: all the systems involved in the process of getting a product or service to customers & dealing with all customers’ needs.
FOUR MAIN CHANNEL SYSTEM ACTIVITIES: The Customer is King/Queen Telemarketing Distribution channels Marketing management
The Customer is Always Right
It is essential for companies today to be aware of their customers and treat them like royalty.
Innovative products & services and superb customer service are becoming a necessity for many organizations. For example: Customer Profiles and
Preference Analysis Prospective Customer
Lists & Marketing Databases
Mass Customization Personalization
Telemarketing
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
Organizations can distribute their products & services through several available delivery channels A company may use its own outlets or
distributors. The company also needs to decide on the delivery mode (trains, planes, trucks).
Distribution Channels Management Once products are in the distribution channels,
firms need to monitor and track them to guarantee customer satisfaction.
Improving Sales at Retail Stores Using information technology, it is possible to
improve sales by reengineering the checkout process.
Marketing Management
Many marketing management activities are supported by computerized information systems. Some areas where this is being done include: Pricing of Products or Services Salesperson Productivity Productivity Software (Sales automation
software) Product-Customer Profitability Analysis Sales Analysis and Trends New Product, Service, and Market Planning Web-Based Systems in Marketing
Managing Accounting & Finance Systems
Managing Accounting & Finance Systems
An accounting/finance information system is responsible for: Gathering the raw data necessary for the
accounting/finance TPS Transforming 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
Financial Planning and Budgeting
Appropriate management of financial assets is a major task in financial planning and budgeting
Financial and 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
Control and Auditing
Specific forms of financial control are: Budgetary controls Internal and External audits Financial Ratio Analysis Profitability Analysis & Cost Control Product Pricing
Managing Human Resource Systems
Developments in Web-based systems increased the popularity of human resources information systems (HRISs) as of the late 1990s.
Initial HRIS applications were mainly related to transaction processing systems.
However, in the last decade we have seen considerable computerization activities in the managerial and even strategic areas.
HRISs and Recruitment
Using the Web for Recruitment With millions of resumes available online,
companies are trying to find appropriate candidates on the Web.
Position Inventory Large organizations need to fill vacant
positions frequently. An advanced intranet-based position inventory system keeps the position inventory list current & matches openings.
Employee Selection To expedite the testing and evaluation process
and ensure consistency in selection, companies use information technologies such as expert systems
HR Maintenance and Development
Performance Evaluation Once digitized, evaluations can be used to
support many decisions, ranging from rewards to transfers to layoffs.
Training and Human Resources Development IT can support the planning, monitoring, and
control of training and retraining activities by using workflow applications.
Intelligent computer-aided instruction (ICAI) and application of multimedia support for instructional activities.
Training can be improved using Web-based video clips & virtual reality.
HR Planning and Management
Personnel Planning Large companies develop qualitative and
quantitative workforce planning models, which can be enhanced if IT is used to collect, update, and process the information
Labor–Management Negotiations Some companies have developed computerized DSS
models that support negotiations These models can simulate financial & other
impacts of fulfilling any demand made by employees and provide answers to queries in seconds
Benefits Administration Using computers for benefits selection can save a
tremendous amount of labor and time Some companies have automated benefits
enrollments
So What is CRM?
CRM stands for Customer Relationship Management
It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them
There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake
The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers (Market research, historical data), sales (Historical data), marketing effectiveness (Sales/Advertising, Sales/Sales Rep), responsiveness (Response to price, promotion, distribution), and market trends (Market research….)
Customer Relationship Management
CRM is 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
Customer service is a series of activities designed to enhance the level of customer satisfaction
CRM, cont’d. Relationship marketing: the “overt
attempt of exchange partners to build a long-term association, characterized by purposeful cooperation and mutual dependence on the development of social, as well as structural, bonds” (Mowen & Minor, 1998).
E-Service: customer service that is performed on the Web, sometimes automatically.
Introduction to CRM
Contact Points: Advertisements, Retail counters, Website
visits, Purchase, Direct sales, Catalogs, direct mail, Telemarketing, Call centers, Internet email, Sales promotions, Banner advertisements, Market research……
What do we get: Data, Data, Data What do we want? Information and
knowledge of customers Why do we want this? Retain customers,
Target customers, Change strategies, Make it easy for customers to access information, product, services. Identify profitable customers
Goal of CRM
To use technology and human resources to gain insight into the behavior of customers and the value of those customers
Provide better customer service Make call centers more efficient Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales processes Discover new customers Increase customer revenues
CRM in Action
According to Seybold and Marshak (1998) there are five steps in building IT-supported CRM. These are: 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.
IT in CRM
Customer Service
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 and Automated Response Help Desks and Call Centers Troubleshooting Tools
CRM is Cool But How Does It Happen?
Buy software, install it, and you are all set (Wrong!)
Identify what information you need and what to do with it!
What are the sources of information, where, when, how data come? Where to store this data? How data is used currently?
CRM systems link these points. Data flow between operational system (Sales,
Inventories, etc.) to Analytical systems (Logical system/software to identify trends, patterns, behavior…by sorting through this records)
Analysts can analyze these patterns to make conclusion about customer needs, profile, profitability to make crucial business decisions
Examples of Data That CRM Needs to Collect
Responses to campaigns Shipping and fulfillment dates Sales and purchase data Account information Web registration data Service and support records Demographic data Web sales data
Managerial Issues
Integration of functional information systems. Integration of existing stand-alone functional information systems is a major problem for many organizations.
Priority of transaction processing. Transaction processing may not be an exotic application, but it deals with the core processes of organizations.
The customer is king/queen. In implementing IT applications, management must remember the importance of the customer, whether external or internal.
Managerial Issues, cont’d.
Finding innovative applications Tools such as Lotus Notes, intranets, and the
Internet enable the construction of many applications that can increase productivity and quality.
System integration Although functional systems are necessary, they
may not be sufficient if they work independently. Using the Web
Web-based systems should be considered in all functional areas. They are effective, inexpensive & user friendly.
Ethical Issues Many ethical issues are related to the code of ethics
followed in CRM and privacy policies.
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