The Study Hall College

Affiliated to University of Lucknow

BBA VI Sem
Management Information System
UNIT – III

Functional Information Systems

Functional Information System is based on the various business functions such as Production,
Marketing, Finance and Personnel etc. These departments or functions are known as functional
areas of business. Each functional area requires applications to perform all information
processing related to the function. The popular functional areas of the business organization are:

 Financial Information System

 Marketing Information System
 Production/ Manufacturing Information System
 Human Resource Information System

(i) Financial Information System

Financial information system is a sub-system of organizational management information system.

This sub-system supports the decision-making process of financial functions at the level of an
organization.

(ii) Marketing Information System

This sub-system of management information system provides information about various

functions of the marketing system of an organization. Marketing is another functional area of the
business organization, which is engaged in marketing (selling) of its products to its customers.

Important functions of the marketing process include the following.

 The marketing identification function

 The purchase motivation function
 The product adjustment function
 The physical distribution function
 The communication function
 The transaction function
 The post-transaction function

(iii) Production /manufacturing Information System

Manufacturing or production information system provides information on production /operation
activities of an organization and thus facilitates the decision-making process of production
managers of an organization. The main decisions to be taken in manufacturing system is Product
Design

(iv) Human Resources Information System

This functional information system supports the functions of human resource management of an
organization. The human resource management function, in its narrow sense, it also known as
personnel management .The function involves:

 Manpower planning
 Staffing
 Training and development
 Performance evaluation, and
 Separation activities

Characteristics of Functional Information System

Equipment Requirements of Functional Information System

Functional Information Systems: Marketing,
Human Resource, Financial and Operational
Information Systems
Functional information systems are designed to support specific business functions within an
organization. These systems are designed to capture, store, process, and disseminate data and
information to support the functional requirements of different departments or units within an
organization. The four main functional information systems are marketing, human resource,
financial, and operational information systems.

Marketing Information System:

A Marketing Information System (MIS) is designed to support the marketing function of an

organization. The system collects, stores, and processes data related to customers, products,
competition, and the marketing environment. The primary purpose of a MIS is to provide
marketing managers with accurate and timely information that they can use to make informed
decisions. Some common components of a MIS include a database of customer information,
sales reports, marketing research reports, and marketing planning tools.

Human Resource Information System:

A Human Resource Information System (HRIS) is designed to support the human resource
function of an organization. The system collects, stores, and processes data related to employee
information, payroll, benefits, and performance management. The primary purpose of an HRIS is
to support the effective management of human resources by providing accurate and timely
information to HR managers. Some common components of an HRIS include an employee
database, payroll processing tools, benefits administration tools, and performance management
tools.

Financial Information System:

A Financial Information System (FIS) is designed to support the financial function of an

organization. The system collects, stores, and processes data related to financial transactions,
accounting records, and financial reporting. The primary purpose of an FIS is to provide
financial managers with accurate and timely information that they can use to make informed
decisions. Some common components of an FIS include an accounting database, financial
reporting tools, budgeting and forecasting tools, and financial analysis tools.

Operational Information System:

An Operational Information System (OIS) is designed to support the operational function of an

organization. The system collects, stores, and processes data related to the day-to-day operations
of the organization. The primary purpose of an OIS is to support the effective management of
operations by providing accurate and timely information to operations managers. Some common
components of an OIS include a production database, inventory management tools, scheduling
and planning tools, and quality control tools.

Cross functional Information Systems

Cross-functional information systems refer to software applications that are designed to
support collaboration, coordination, and information exchange between multiple
departments within an organization. These systems can be used to automate and streamline
work processes, increase operational efficiency, and improve decision-making. Examples of
cross-functional information systems include enterprise resource planning (ERP) systems,
customer relationship management (CRM) systems, and supply chain management (SCM)
systems. The goal of these systems is to provide a single source of truth for data and information,
so that all departments can access the same information and make informed decisions based on
the same data. Effective implementation of cross-functional information systems can lead to
improved collaboration, increased productivity, and better business outcomes.

Cross functional Information Systems components

The components of cross-functional information systems can vary depending on the specific
system and the needs of the organization, but some common components include:

1. Data storage and management: A centralized database that stores and manages data from
various departments, allowing for data integration and consistency across the organization.
2. Business process automation: Tools to automate and streamline business processes, reducing
manual effort and increasing efficiency.
3. Workflow management: A system to manage and track workflows between different
departments, allowing for better collaboration and coordination.
 4. Reporting and analytics: A suite of tools to analyze data, generate reports, and provide insights
into business performance.
5. User interfaces: An intuitive interface for users to interact with the system and access data,
reports, and insights.
6. Integration with existing systems: Interfaces and APIs to connect the cross-functional
information system with existing systems and applications, reducing duplication of effort and
improving data consistency.
7. Security and access controls: Measures to ensure the security and confidentiality of data, as
well as to control access to the system and its components.

Cross-functional information systems can be viewed through the lens of several theories
and frameworks, including:

1. Resource-Based View: This theory suggests that organizations can gain a competitive advantage
by leveraging their internal resources, such as information systems. Cross-functional information
systems can help organizations to better manage and utilize their internal resources, leading to
improved performance and competitiveness.
2. Process-Oriented View: This theory focuses on the importance of process efficiency and
effectiveness in organizations. Cross-functional information systems can help organizations to
streamline and optimize their processes, leading to improved efficiency and effectiveness.
3. Strategic Alignment: This theory emphasizes the importance of aligning information systems
with the overall strategy and goals of the organization. Cross-functional information systems can
help organizations to better align their information systems with their strategic goals and
objectives.

The process of implementing a cross-functional information system typically involves

several steps, including:

1. Defining requirements: Determine the specific needs and requirements of the different
departments and stakeholders involved in the system.
2. Design and development: Design and develop the system, taking into account the requirements
and the desired features and functionality.
3. Implementation: Deploy and implement the system, including data migration, training, and user
adoption.
4. Monitoring and evaluation: Regularly monitor and evaluate the performance of the system, and
make improvements and changes as needed.
5. Maintenance and support: Provide ongoing maintenance and support for the system, including
updates, bug fixes, and technical support.

Cross-functional information systems uses

Cross-functional information systems (CFIS) are used to coordinate and align activities and
information across multiple departments or functions within an organization. They support
communication, collaboration, and decision-making between different functional areas such as
finance, human resources, operations, marketing, and others. The use of CFIS helps to improve
the efficiency and effectiveness of business processes, reduce silos, and promote a cross-
functional perspective. This, in turn, leads to better decision making, increased innovation, and
improved business results. Examples of cross-functional information systems include enterprise
resource planning (ERP), customer relationship management (CRM), and supply chain
management (SCM) systems.

ERP Meaning and Functions

Enterprise resource planning (ERP) refers to a type of software that organizations use to
manage day-to-day business activities such as accounting, procurement, project management,
risk management and compliance, and supply chain operations. A complete ERP suite also
includes enterprise performance management, software that helps plan, budget, predict, and
report on an organization’s financial results.

ERP systems tie together a multitude of business processes and enable the flow of data between
them. By collecting an organization’s shared transactional data from multiple sources, ERP
systems eliminate data duplication and provide data integrity with a single source of truth.

Enterprise resource planning (ERP) is the integrated management of main business processes,
often in real time and mediated by software and technology.

ERP is usually referred to as a category of business management software typically a suite of

integrated applications that an organization can use to collect, store, manage, and interpret data
from many business activities.

ERP provides an integrated and continuously updated view of core business processes using
common databases maintained by a database management system. ERP systems track business
resources cash, raw materials, production capacity and the status of business commitments:
orders, purchase orders, and payroll. The applications that make up the system share data across
various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data.
ERP facilitates information flow between all business functions and manages connections to
outside stakeholders.

Enterprise system software is a multibillion-dollar industry that produces components supporting

a variety of business functions. IT investments have become the largest category of capital
expenditure in United States-based businesses over the past decade. Though early ERP systems
focused on large enterprises, smaller enterprises increasingly use ERP systems.

The ERP system integrates varied organizational systems and facilitates error-free transactions
and production, thereby enhancing the organization’s efficiency. However, developing an ERP
system differs from traditional system development. ERP systems run on a variety of computer
hardware and network configurations, typically using a database as an information repository.

The Business Value of ERP

It’s impossible to ignore the impact of ERP in today’s business world. As enterprise data and
processes are corralled into ERP systems, businesses can align separate departments and improve
workflows, resulting in significant bottom-line savings. Examples of specific business benefits
include:

 Improved business insight from real-time information generated by reports

 Lower operational costs through streamlined business processes and best practices
 Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders
 Improved efficiency through a common user experience across many business functions and
well-defined business processes
 Consistent infrastructure from the back office to the front office, with all business activities
having the same look and feel
 Higher user-adoption rates from a common user experience and design
 Reduced risk through improved data integrity and financial controls
 Lower management and operational costs through uniform and integrated systems

Functions of ERP

While any business may have different uses for ERP, there are six key functions that are found
most commonly in the software.

1. Human Resources

An HR module should be able to process tasks related to managing your employees, including
payroll, timesheets, benefits, onboarding and offboarding. The HR module should automate
payments, including deductions so, for example, an hourly employee’s wages are automatically
calculated based on her timesheet, benefits and taxes are deducted and the net pay is
automatically deposited into her bank account.

2. Customer Relationship Management (CRM)

A CRM module stores data related to customers and prospects, giving employees insights that
can improve sales and marketing processes. For example, CRM can track customer buying
habits, so you can see what types of products you may be able to upsell and when the best time
may be to offer these products. CRM is especially useful for an e-commerce business, allowing
you to target prospects with ads that are meaningful to them. A CRM module can also track
when prospects have been contacted and what was discussed, eliminating additional sales calls
that may not be appropriate.

3. Business Intelligence (BI)

A BI module can help business leaders make well-informed decisions based on meaningful and
timely data from any department as needed. This module can analyze practically any business
process and provide reports without any excess information. Reports can be in a visual format or
presented in tables, depending on the manager’s preferences.

4. Supply Chain Management (SCM)

An SCM module usually works with an inventory management system to improve the efficiency
of a company’s supply chain by using real-time data to optimize manufacturing and distribution
processes. This can give you the ability to intervene when a problem happens, rather than
waiting to find out the next day or later. More than that, today’s SCM software can track and
analyze these processes to predict when a problem is likely to occur. An example of this is the
ability to notify customers when orders are being processed and shipped in real-time.

5. Inventory Management System

An inventory management system module processes order fulfillment and tracks warehouse
inventory, greatly reducing the need to track inventory manually. This is very useful to
manufacturers or companies with their own distribution centers where tracking inventory can
become extremely complex. Features can include real-time inventory on the company’s website
to inform customers what is and what isn’t in stock.

6. Financial Management

Just about every business with an ERP will use a financial management module. It works in
conjunction with the other ERP components to track the flow of money, from the purchase of
new supplies to paying employees and issuing invoices to customers. Financial management
software in an ERP can also help you budget, produce financial forecasts and give you insights
into where costs can be reduced.

Need of ERP

 Lower operational costs through streamlined business processes and best practices.
 Improved business insight from real-time information generated by reports.
 Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders.
 Improved efficiency through a common user experience across many business functions and
well-defined business processes.
  Consistent infrastructure from the back office to the front office, with all business activities
having the same look and feel.
 Higher user-adoption rates from a common user experience and design.
 Reduced risk through improved data integrity and financial controls.
 Lower management and operational costs through uniform and integrated systems.

ERP systems typically include the following characteristics:

 An integrated system
 Operates in (or near) real time
 A common database that supports all the applications
 A consistent look and feel across modules
 Installation of the system with elaborate application/data integration by the Information
Technology (IT) department, provided the implementation is not done in small steps
 Deployment options include: on-premises, cloud hosted, or SaaS

Functional areas

An ERP system covers the following common functional areas. In many ERP systems, these are
called and grouped together as ERP modules:

 Financial accounting: General ledger, fixed assets, payables including vouchering, matching and
payment, receivables and collections, cash management, financial consolidation
 Management accounting: Budgeting, costing, cost management, activity based costing
 Human resources: Recruiting, training, rostering, payroll, benefits, retirement and pension plans,
diversity management, retirement, separation
 Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow
management, quality control, manufacturing process, manufacturing projects, manufacturing
flow, product life cycle management
 Order processing: Order to cash, order entry, credit checking, pricing, available to promise,
inventory, shipping, sales analysis and reporting, sales commissioning
 Supply chain management: Supply chain planning, supplier scheduling, product configurator,
order to cash, purchasing, inventory, claim processing, warehousing (receiving, putaway, picking
and packing)
 Project management: Project planning, resource planning, project costing, work breakdown
structure, billing, time and expense, performance units, activity management
 Customer relationship management (CRM): Sales and marketing, commissions, service,
customer contact, call center support CRM systems are not always considered part of ERP
systems but rather business support systems (BSS)
 Data services: various “Self–service” interfaces for customers, suppliers and/or employees
 Management of school and educational institutes.

Reasons to use ERP

1. Forecasting reduces errors

ERP provides users with opportunity to create accurate forecasts. As the data is always stored in
the common database, it is much easier and faster to forecast with realistic estimates.

2. Team collaboration

The whole company’s information is stored in the common database and divided into different
areas and departments. Thus, it is much easier to access the required data and operate it. The
work inside and outside department becomes more efficient. Data centralization in this way
promotes staff collaboration.

3. Money saving

ERP system implementation is not simple and cheap process but it helps to save company’s
budget. There are two reasons for that:

 The system work doesn’t require IT staff involvement, managers can easily regulate the system
themselves;
 As the efficiency improved by the system the possibility of errors, delays and additional costs for
problems fixing is reduced.

Thus, ERP solution is not money waste but investment in the future.

4. Productivity boost

Some redundant task is automated. So, users now can focus more on the relevant primary tasks.
Thus, staff productivity grows.

5. Mobility

Some ERP system provide constant access anywhere you are with the internet connection. So,
users can work with ERP anytime and anywhere.

6. Data security

ERP provides opportunity to restrict particular data access. Managers can control information
confidentiality.

7. Easy-to-use reporting system

Create reports of any complexity, save templates, share them without additional IT help.
Enterprise Resource Planning really eases working processes.

Core Components of ERP

Human Resource (HR)

What is the base of every company? Of course, it’s staff. Company’s employee is what the
company starts from. Exactly this resource makes its best for organization’s operation and
development. That is why HR team needs a tool for efficient staff management.

HR ERP module includes employee records and helps to manage such actions like:

 Salary and payment reports;

 Attendance tracking;
 Performance reviews;
 Promotion;
 Planning of working and holidays hours and others.

Financial Management

The financial management component within your ERP system stores, monitors and analyses all
of your financial data, including accounts payable, accounts receivable, costs, budgets and
forecasts. It helps reveal insights into your spending, so you can discover profit trends and times
of unusually high spending. You can then put that data to good use by changing whatever
processes are causing lower profits or high spend, so you can maximize your profits while
reducing costs.

The financial management component can help improve cash flow, lower costs, and increase
profitability while maintaining accurate reporting. ERP software with a strong financial feature
should ensure companies meet financial reporting and tax requirements with a single accounting,
banking and payment system. Keep in mind: it needs to allow for enhancements in financial
performance with real-time information on expenses and revenue contribution.

Customer Relationship Management (CRM)

After HR module this one on the second place for its importance as the main aim is, of course, to
meet the customer’s needs. CRM component stores all the customer’s data and helps to analyze
it in order to perform the above goal. It provides opportunity to track buying history, calls,
communication. CRM in this way boosts organization performance, as on the base of the stored
info, it is much easier to consider customer’s preferences and provide quality service.

Supply Chain Management

As ERP solutions mainly cater to manufacturing and distribution companies, your ERP system
should absolutely be able to monitor demand, supply, manufacturing status, logistics and
distribution in record time. The SCM component of an ERP system is one of the most crucial for
this reason. You need the best SCM features to be able to optimize your supply chain, and that
starts by collecting real-time data. Real-time data allows you to keep tabs on your supply chain,
so you can find and fix issues as they happen, rather than waiting until you receive the data a day
or more after the fact.
Failing to find information, such as the location of a product’s key components, and promptly
share this information with supply partners, can have a significant impact on a company’s supply
chain. The SCM component, with the aid of real-time data, can help with demand planning, so
you can create an up-to-the-minute accurate production plan that meets demand, but doesn’t
exceed it.

Sales and Marketing

These two components can be presented both together and separately. But usually they have a
similar function. Sales and marketing module is one of the core ERP components as it is the
basis for the company revenue. Thus, it is very important to take care of marketing strategy in
order to have sufficient funds for business management.

This module usually includes:

 Sales order;
 Customer management;
 Marketing methods;
 Quotation management;
 Sales invoices drafting.

Business Intelligence (BI)

Considering how many businesses today are attempting to create data-driven decision-making
processes, BI has quickly become one of the standard ERP components. The BI component of
your ERP software collects and analyzes data, providing you with actionable insights related to
your business processes. BI in ERP systems can be your organization’s eyes and ears, allowing
you to monitor your chosen key performance indicators (KPIs) and make changes when those
KPIs aren’t where they should be.

Manufacturing

Not every company has manufacturing but in case organization has it, this module is a must. It
provides all the necessary information for manufacturing run. Manufacturing ERP module can
include:

 Bill of materials;
 Records of working orders;
 Manufacturing methods and others.

This list of core ERP components can be supplemented according to organization’s needs.

But let’s move even further and try to summarize everything up. Follow the next part and
overview the top asked questions about ERP Components.
Supply chain management systems
Supply chain management systems (SCMS) are software applications that help organizations
manage their supply chain processes, from raw material procurement to finished goods delivery.
These systems provide real-time visibility and control over the entire supply chain, enabling
organizations to optimize their processes and reduce costs.

SCMS can help organizations optimize their supply chain processes, reduce costs, improve
efficiency, and enhance customer satisfaction. By providing real-time visibility and control over
the entire supply chain, SCMS enable organizations to make informed decisions and respond
quickly to changing market conditions.

Features and Functions of supply chain management systems:

1. Planning and Forecasting: SCMS help organizations to forecast demand and plan their
production and inventory levels accordingly. These systems use data analytics and historical data
to predict future demand and help organizations optimize their supply chain operations.

2. Inventory Management: SCMS help organizations manage their inventory levels and track
the movement of goods through the supply chain. These systems provide real-time visibility into
inventory levels, enabling organizations to avoid stockouts or excess inventory.

3. Supplier Management: SCMS help organizations manage their relationships with suppliers,
including supplier selection, supplier performance monitoring, and contract management.

4. Logistics and Transportation Management: SCMS help organizations manage their

transportation and logistics operations, including route planning, carrier selection, and shipment
tracking.

5. Order Management: SCMS help organizations manage customer orders and track their status
through the supply chain. These systems provide real-time visibility into order status and enable
organizations to manage orders more efficiently.

Components of Supply Chain Management Systems:

Supply Chain Management (SCM) systems encompass various components that work together to
optimize the flow of goods, information, and finances across the entire supply chain. Here are the
key components of SCM systems:

1. Planning: This involves creating a strategic plan for the supply chain, including demand
planning, forecasting, inventory planning, and production planning. It aims to align supply with
demand efficiently.
2. Sourcing: This component deals with selecting suppliers, negotiating contracts, managing
supplier relationships, and ensuring the timely delivery of goods and services.

3. Procurement: Procurement involves the actual purchasing of goods and services from
suppliers. It includes activities such as order placement, supplier performance evaluation, and
payment processing.

4. Production: This component focuses on manufacturing and assembling products based on

demand forecasts and inventory levels. It includes production scheduling, quality control, and
capacity planning.

5. Inventory Management: Inventory management involves managing the levels of raw

materials, work-in-progress, and finished goods to meet customer demand while minimizing
holding costs and stockouts.

6. Logistics: Logistics encompasses the transportation, warehousing, and distribution of

products. It includes transportation planning, route optimization, warehouse management, and
order fulfillment.

7. Customer Service: Customer service involves handling customer inquiries, orders,

complaints, and returns efficiently. It aims to enhance customer satisfaction and loyalty.

8. Risk Management: This component focuses on identifying and mitigating risks that could
disrupt the supply chain, such as supplier issues, natural disasters, geopolitical events, or market
fluctuations.

9. Information Systems: Information systems play a crucial role in SCM by providing real-time
visibility into supply chain activities, facilitating communication and collaboration among
stakeholders, and supporting data analytics for decision-making.

10. Performance Measurement: SCM systems include metrics and KPIs (Key Performance
Indicators) to evaluate the performance of the supply chain, such as on-time delivery, inventory
turnover, supplier performance, and cost efficiency.

By integrating these components effectively, organizations can achieve better coordination,

reduced costs, improved customer service, and overall supply chain optimization.

Advantages of Supply Chain Management Systems:

1. Improved Efficiency: SCMS enables organizations to optimize their supply chain processes
and reduce waste, leading to improved efficiency and cost savings.

2. Enhanced Collaboration: SCMS facilitates real-time communication and collaboration

among different stakeholders involved in the supply chain, improving coordination and reducing
errors.
3. Better Customer Service: SCMS provides real-time visibility into inventory levels and order
status, enabling organizations to fulfill customer orders more efficiently and improve customer
satisfaction.

4. Increased Agility: SCMS enables organizations to respond quickly to changing market

conditions, by providing real-time visibility into the supply chain and enabling informed
decision-making.

5. Reduced Costs: SCMS helps in reducing supply chain costs by optimizing processes,
reducing waste, and improving efficiency. It also helps in reducing inventory holding costs and
transportation costs through better planning and optimization.

Using data from Customer Relationship

Management Systems to Feed into Strategy
The better a business can manage the relationships it has with its customers the more successful
it will become. Therefore IT systems that specifically address the problems of dealing with
customers on a day-to-day basis are growing in popularity.

Customer relationship management (CRM) is not just the application of technology, but is a
strategy to learn more about customers’ needs and behaviours in order to develop stronger
relationships with them. As such it is more of a business philosophy than a technical solution to
assist in dealing with customers effectively and efficiently. Nevertheless, successful CRM relies
on the use of technology.

This guide outlines the business benefits and the potential drawbacks of implementing CRM. It
also offers help on the types of solution you could choose and how to implement them.

CRM

In the commercial world the importance of retaining existing customers and expanding business
is paramount. The costs associated with finding new customers mean that every existing
customer could be important.

The more opportunities that a customer has to conduct business with your company the better,
and one way of achieving this is by opening up channels such as direct sales, online sales,
franchises, use of agents, etc. However, the more channels you have, the greater the need to
manage your interaction with your customer base.

Customer relationship management (CRM) helps businesses to gain an insight into the behaviour
of their customers and modify their business operations to ensure that customers are served in the
best possible way. In essence, CRM helps a business to recognise the value of its customers and
to capitalise on improved customer relations. The better you understand your customers, the
more responsive you can be to their needs.
CRM can be achieved by:

 Finding out about your customers’ purchasing habits, opinions and preferences
 Profiling individuals and groups to market more effectively and increase sales
 Changing the way you operate to improve customer service and marketing

Benefiting from CRM is not just a question of buying the right software. You must also adapt
your business to the needs of your customers.

Business benefits of CRM

Implementing a customer relationship management (CRM) solution might involve considerable

time and expense. However, there are many potential benefits.

A major benefit can be the development of better relations with your existing customers, which
can lead to:

 Increased sales through better timing due to anticipating needs based on historic trends
 Identifying needs more effectively by understanding specific customer requirements
 Cross-selling of other products by highlighting and suggesting alternatives or enhancements
 Identifying which of your customers are profitable and which are not

This can lead to better marketing of your products or services by focusing on:

 Effective targeted marketing communications aimed specifically at customer needs

 A more personal approach and the development of new or improved products and services in
order to win more business in the future

Ultimately this could lead to:

 Enhanced customer satisfaction and retention, ensuring that your good reputation in the
marketplace continues to grow
 Increased value from your existing customers and reduced cost associated with supporting and
servicing them, increasing your overall efficiency and reducing total cost of sales
 Improved profitability by focusing on the most profitable customers and dealing with the
unprofitable in more cost effective ways

Once your business starts to look after its existing customers effectively, efforts can be
concentrated on finding new customers and expanding your market. The more you know about
your customers, the easier it is to identify new prospects and increase your customer base.

Even with years of accumulated knowledge, there’s always room for improvement. Customer
needs change over time, and technology can make it easier to find out more about customers and
ensure that everyone in an organization can exploit this information.
Types of CRM solution

Customer relationship management (CRM) is important in running a successful business. The

better the relationship, the easier it is to conduct business and generate revenue. Therefore using
technology to improve CRM makes good business sense.

CRM solutions fall into the following four broad categories.

1. Outsourced solutions

Application service providers can provide web-based CRM solutions for your business. This
approach is ideal if you need to implement a solution quickly and your company does not have
the in-house skills necessary to tackle the job from scratch. It is also a good solution if you are
already geared towards online e-commerce.

2. Off-the-shelf solutions

Several software companies offer CRM applications that integrate with existing packages. Cut-
down versions of such software may be suitable for smaller businesses. This approach is
generally the cheapest option as you are investing in standard software components. The
downside is that the software may not always do precisely what you want and you may have to
trade off functionality for convenience and price. The key to success is to be flexible without
compromising too much.

3. Custom software

For the ultimate in tailored CRM solutions, consultants and software engineers will customise or
create a CRM system and integrate it with your existing software.

However, this can be expensive and time consuming. If you choose this option, make sure you
carefully specify exactly what you want. This will usually be the most expensive option and
costs will vary depending on what your software designer quotes.

4. Managed solutions

A half-way house between custom and outsourced solutions, this involves renting a customised
suite of CRM applications as a tailored package. This can be cost effective but it may mean that
you have to compromise in terms of functionality.

How to implement CRM?

The implementation of a customer relationship management (CRM) solution is best treated as a

six-stage process, moving from collecting information about your customers and processing it to
using that information to improve your marketing and the customer experience.
Stage 1: Collecting information

The priority should be to capture the information you need to identify your customers and
categorise their behaviour. Those businesses with a website and online customer service have an
advantage as customers can enter and maintain their own details when they buy.

Stage 2: Storing information

The most effective way to store and manage your customer information is in a relational
database – a centralised customer database that will allow you to run all your systems from the
same source, ensuring that everyone uses up-to-date information.

Stage 3: Accessing information

With information collected and stored centrally, the next stage is to make this information
available to staff in the most useful format.

Stage 4: Analysing customer behaviour

Using data mining tools in spreadsheet programs, which analyse data to identify patterns or
relationships, you can begin to profile customers and develop sales strategies.

Stage 5: Marketing more effectively

Many businesses find that a small percentage of their customers generate a high percentage of
their profits. Using CRM to gain a better understanding of your customers’ needs, desires and
self-perception, you can reward and target your most valuable customers.

Stage 6: Enhancing the customer experience

Just as a small group of customers are the most profitable, a small number of complaining
customers often take up a disproportionate amount of staff time. If their problems can be
identified and resolved quickly, your staff will have more time for other customers.

Potential drawbacks of CRM

There are several reasons why implementing a customer relationship management (CRM)
solution might not have the desired results.

There could be a lack of commitment from people within the company to the implementation of
a CRM solution. Adapting to a customer-focused approach may require a cultural change. There
is a danger that relationships with customers will break down somewhere along the line, unless
everyone in the business is committed to viewing their operations from the customers’
perspective. The result is customer dissatisfaction and eventual loss of revenue.
Poor communication can prevent buy-in. In order to make CRM work, all the relevant people in
your business must know what information you need and how to use it.

Weak leadership could cause problems for any CRM implementation plan. The onus is on
management to lead by example and push for a customer focus on every project. If a proposed
plan isn’t right for your customers, don’t do it. Send your teams back to the drawing board to
come up with a solution that will work.

Trying to implement CRM as a complete solution in one go is a tempting but risky strategy. It is
better to break your CRM project down into manageable pieces by setting up pilot programs and
short-term milestones. Consider starting with a pilot project that incorporates all the necessary
departments and groups but is small and flexible enough to allow adjustments along the way.

Business Value of Enterprise applications and

challenges in Implementing
Business Value of Enterprise Applications:

Enterprise applications, also known as Enterprise Resource Planning (ERP) systems, can bring
several business benefits when implemented successfully, including:

Improved Business Processes:

Enterprise applications can integrate various business functions and streamline business
processes, leading to improved efficiency and cost savings.

Increased Collaboration:

Enterprise applications can facilitate collaboration and communication among different

departments and business units, leading to better decision-making and problem-solving.

Real-time Data:

Enterprise applications provide real-time access to critical business data, enabling organizations
to make informed decisions quickly.

Improved Customer Service:

Enterprise applications can improve customer service by providing real-time visibility into
customer orders, inventory levels, and order status.

Scalability:
Enterprise applications can scale with the growth of the organization, providing a flexible and
adaptable system for managing business processes.

Challenges in Implementing Enterprise Applications:

Implementing enterprise applications can be a complex and challenging process. Some of the
challenges organizations may face include:

Customization:

Enterprise applications may need to be customized to meet the specific needs of the organization,
which can be time-consuming and expensive.

Integration:

Integrating enterprise applications with existing legacy systems and other third-party applications
can be a challenge.

Data Migration:

Migrating data from existing systems to the new enterprise application can be a complex process,
requiring careful planning and execution.

Training and Change Management:

Implementing enterprise applications can require significant changes to existing business

processes, which can be challenging to manage. Proper training and change management
processes are critical to ensuring a successful implementation.

Cost:

Implementing enterprise applications can be expensive, requiring significant investments in

software licenses, hardware, customization, and training.

How to overcome these challenges?

To overcome the challenges associated with implementing enterprise applications, organizations

can take the following steps:

1. Define Clear Objectives and Requirements: Clearly define the objectives and
requirements for the enterprise application implementation project. This includes
identifying the specific business processes and functions that the enterprise application
will support, and the key performance indicators (KPIs) that will be used to measure
success.
2. Select the Right Vendor and Solution: Conduct thorough research and evaluations to
select the right vendor and enterprise application solution that meets the organization’s
 needs. The selected vendor should have a proven track record of successful
implementations and provide adequate support and training.
3. Plan the Implementation Process: Develop a comprehensive implementation plan that
outlines the project scope, timeline, resource requirements, and potential risks. The
plan should also include a detailed testing and validation process to ensure that the
enterprise application meets the organization’s requirements.
4. Address Customization and Integration: Address the customization and integration
requirements upfront in the planning process to avoid delays and additional costs.
Ensure that the enterprise application can integrate seamlessly with existing systems
and third-party applications.
5. Provide Adequate Training and Change Management: Provide adequate training and
change management processes to ensure that employees understand the new system
and processes. Encourage feedback and communication to address any issues or
concerns that may arise.
6. Monitor Progress and Performance: Monitor the progress and performance of the
enterprise application implementation project, using the defined KPIs to measure
success. Identify and address any issues or risks promptly to avoid delays or additional
costs.