Management Information System
- Effective CRM
Customer Relationship Management or CRM, is the strategy to understand the needs of the customers in order to strengthen the relationship with them . In order to effectively implement CRM, the organization needs to understand the product and services that exactly match the requirements of the customers and how to make those services better by strategies such as cross selling the products effectively, helping the sales staff to close deals with the customers faster and retaining the old customers while discovering the new ones .
For this the organization must look into how the information about the customers are obtained, where it gets stored and how is it used. For example, a company may choose to interact with the customers through mailing campaigns, websites, call centers, mobile sales force staff and advertisements. CRM helps in linking each of these components and make it flow through different operational and analytical systems. These systems help in sorting these records for pattern and pinpoint areas where better services are needed.
- Division running the CRM
The CRM project cannot be left to be handled by one department alone since the biggest returns can only be guaranteed when business, CRM and IT are aligned together. Whichever department uses the CRM software should take the ownership of the project. IT and CIO should also be present to provide advice and guidance for CRM implementation.
- Industries more active in implementing CRM
The most active industries that have implemented CRM are financial services and telecommunications industry followed by the consumer goods makers, retailers and the high tech firms.
- History of ERP by including MRP and MRPII.
The history of ERP began during the early attempts at calculating machines during the 1940’s. The Enterprise Resource Planning (ERP) was born finally in the 1960s as the joint effort between J.I. Case and IBM . MRP got evolved from the need to manage demand and ordering in the 1960’s. Material Requirements Planning or MRP is the application software that serves as a method for the planning and scheduling the materials for manufacturing of complex products. In 1970’s MRPII was developed in order to bring demand and time phasing in the planning process. The ERP that was developed from the MRPII systems were integrated with the financial applications in order to provide a complete solution for the management of the inventory, people resources and cash of the organization.
- What will ERP fix in a company
There are five major reasons for implementation of ERP in a company.
- ERP helps in providing an integrated information about the finances . If a CEO looks into the overall performance of the company, he/she might come across a different set of revenue numbers. Through ERP, a single version of the financial information can be created as everyone uses the same system.
- ERP also provides an integrated customer order information in one place. If the information is in integrated form and not scattered among different systems, it becomes easy for the manufacturer to keep a track of the order among various locations at the same time.
- The next thing fixed by the ERP is the standardization and speeding up of the manufacturing process because standard methods are used for manufacturing and automation . This also saves time, reduces head count and increases productivity.
- ERP also helps in reducing the inventory and make the manufacturing process flow smoothly. The time used for the manufacturing of the product can be reduced and ERP also helps in planning the delivery of the products efficiently.
- In any business that has multiple units, the HR information may not be unified and simple. ERP can help in fixing this too.
- Why does an ERP project usually take longer than what ERP vendors claim
While selecting the ERP software, it can be difficult to know how long it will take to get implemented. The sales representatives might only consider the optimistic scenarios. The most important point while implementing an ERP project is unrealistic expectations. Organizations believe there won’t be any management or process changes while the project is going on. Also, the business-oriented activities are not accounted adequately, such as predicting the activities that are not directly related to the software. ERP projects take longer than what is claimed by ERP vendors as the ERP implementation involves a change in the business processes at various levels in the organization. It takes time for the organization to implement changes at various levels that increases the time taken for ERP project.
Sometimes, organizations do not have a clear picture about the resources required for the manufacturing of the product . This mainly happens when the two parties involved have different expectations from the product.
Some organizations that use ERP software without customizing it as per the product requirement also end up spending more time than expected in the implementation of the project. Companies must set realistic expectations while choosing the ERP software, manage the resources and customize in order to help contain the cost and time .
- ERP costs
The cost of ERP varies from company to company depending on the packages and budgeting processes. Among the 63 companies that were surveyed in the total cost of ownership (TCO) survey of ERP by Meta Group in the year 2002, the average TCO was $15 million .
However, there are certain areas that might add to the total cost, thus contributing towards the hidden cost of the project.
- Training: The training expenses are high as well as inevitably since the workers have to learn the new processes required for the manufacturing process. The training needs to be provided for learning both IT and business skills.
- Testing: Testing of ERP packages and integrating is important so that software links can be made on a case-by-case basis. Testing the ERP integration has to be made from a process oriented perspective.
- Customization: Apart from these add-ons, what mainly increases the cost of the project is a customization of the core ERP process. This is quite costly as it involves changing each module of the tightly integrated ERP software.
Other factors affecting the cost are data conversion, data analysis, and consultation for identifying the objectives involved in the implementation of the project. Apart from these factors, if a significant staff opts to quit from the project, replacing him/her is another costly affair.
Though some of the factors contributing towards the hidden cost of the ERP is unexpected and uncontrolled, some system costs are a revealed after the company runs them for some time.
- ERP project failures
There are several reasons for the failure of ERP projects.
- Unrealistic expectations: The first one is setting unrealistic expectations at the outset. This happens when the organization has a hurried approach. It is important to understand the running of the business and the level of resources committed towards the project.
- Change Management: The second point is the failure to manage organizational changes. The people involved in the project should understand the business fully and not just have an institutional knowledge.
- Nonparticipation of key stakeholders: The next reason for failure is not involving the key stakeholders in the project. Many executives might just be busy with other works or status meetings, and not have the bandwidth to absorb the ERP.
- Poor Project Management: Poor project management is another factor in ERP failure. The person leading the ERP project should have experience in handling it.
- Performance Measurement: Lastly comes the failure to manage business benefits. Failure should be measured by comparing obtained results with the expected outcome. Most ERP’s don’t just fail due to unrealistic business benefits, but rather the accumulation of small incidences that contributed towards the failure .
References
- Davis, Z. (2013). Top 5 Reasons ERP Implementations Fail and What You Can Do About It. CA: Ziff Davis B2B.
- Erpandmore.com. (n.d.). About ERP History. Retrieved from Erpandmore.com: http://www.erpandmore.com/erp-reference/erp-history/
- Haridasan, V., & Venkatesh, S. (2011). CRM Implementation in Indian Telecom Industry. International Journal of Business Research and Management (IJBRM). Retrieved from http://www.academia.edu/4983957/Vani_CRM_Implementation_in_Indian_Telecom_Industry_Evaluating_the_Effectiveness_of_Mobile_Service_Providers_Using_Data_Envelopment_Analysis
- Kimberling, E. (2009, June 1). Four Reasons Why ERP Projects Take Longer Than Expected. Retrieved from It.toolbox.com/: http://it.toolbox.com/blogs/erp-roi/four-reasons-why-erp-projects-take-longer-than-expected-31967#comments
- Wailgum, T. (2007, March 6). CRM Definition and Solutions. Retrieved from http://www.cio.com: http://www.cio.com/article/2439505/customer-relationship-management/crm-definition-and-solutions.html
- Wailgum, T. (2007, March 7). ERP Definition and Solutions. Retrieved from Cio.com: http://www.cio.com/article/2439502/enterprise-resource-planning/erp-definition-and-solutions.html?page=2
