Kingdom of Saudi Arabia

Ministry of Higher Education

Al-Imam Muhammad Ibn Saud Islamic University
College of Computer and Information Sciences

Chapter 7 : ERP: Sales, Marketing and CRM

IS 395: Enterprise Resource Planning
Objectives of the chapter
• Know the steps in the sales process
• Be familiar with CRM functionality
• Recognize the differences between sales force
automation and CRM
• Understand the “customer’s point of view”
• Realize how knowledge management and CRM
work together
 Back-office and Front-office system
• Traditionally, ERP systems were considered
back-office systems, implying that they support
business process that are not visible to the
customer.
• Example of back-office functions:
• Accounting and finance
• Human resources
• Operations.
Back-office and Front-office system
• Back-office systems
• interacts with front-office systems that employees
use as they interact with customers, by providing
information to them or using information from
them.
• Front-office systems,
• support activities that interface with customers
and enable the organization to serve them across
various distribution channels such as retail and
the web.
ERP Sales Order Processing

• Objective – capture and fulfill the customer order, the

document that begins the order fulfillment process
• Ways to refer to Sales Order Processing:
1. Contact-to-contract-to-cash
2. Quote-to-cash
3. Order-to-cash
Sales Related Activities
• Lead Generation:
Identification of potential customer. Marketing efforts
goal→ generate leads.
• Lead generation techniques:
Trade shows, direct or digital marketing, cold-calling.
• Contact:
Assess whether Lead is prospect who will do
business with company.
• Qualification – Whether Prospect is worth spending
time. Sales person qualify the prospect using three
different criteria:
Sales Related Activities
1) Applicability

2) Authority

3) Affordability
Sales Related Activities

• Opportunity/Inquiry (Potential sale)..

Opportunity for seller to convert the qualified
prospect into customer

• Quote – estimate or quote for products and

services to qualified prospect identified in
opportunity, with an expiration date

• Sales Order – The customer accepts the quote

that turns into a contract or sales order.
 Sales Related Activities

• Customer Order/Order Acknowledgement –

confirmation of order receipt
• Order Fulfillment – includes pick, pack, and ship
activities
• Billing – invoice is sent to the customer (A/R or
Amount receivable)
• Cash Collection – payment is received from the
customer

ERP is excellent at automating the sales order process using best practices.
BUT companies needs more than that… They seek to retain their best customers and
maximize the effectiveness of every customer interaction where it is sales, service or
marketing. CRM is a bolt-on to ERP that is the answer to what companies seek
 Customer Relationship Management-CRM

• More demanding
customers with high Table 7-1: What is CRM About?
expectations today Acquiring customers
• Customer relationship
Keeping customers
management (CRM) bolt-
on to ERP. Helps an Growing your customers

organization with customer Gaining customer insight

demands: Interacting with your customers across all touch
• “Know me and know my points
Building lasting relationships with your customers
business”
• “Help me solve my Delivering value to your customers
business problems” Achieving a sustainable competitive advantage

• “Make it easy for me to Growing your business

do business with you” SAP 2007
Example of CRM solution (1\2)
• A typical commercial call center where
customer call in to place orders.
• At a typical call center, the telephone
system and PCs are connected so that as
customers call in, they are routed to the
appropriate customer service
representative (CSR)
Example of CRM solution (2\2)
• Information about the customer
• pops ups on the CSR’s screen. This pop up
application includes pertinent customer
information, including purchasing history
and buying habits.
• Armed with this information, the CSR will
suggest complementary items, explain
promotions, and answer any questions.
CRM and ERP: Transactions versus Events

• Transactions have financial implications (things are

debited and credited, so will affect the financial
statements directly)
• An event, or activity, is any step in the business
process and may or may not have financial
implications.
• Thus, transactions are a subset of events.

Events
Transactions
The contact-
Where CRM and ERP Meet
to-contract-
to-cash
process can
be used to
explain the
difference
between
events and
transactions.

All the steps

in CRM,
whether
structured or
unstructured
are events .
Invoice
generation in
CRM is
Figure 7-2: Where CRM and ERP Meet
transaction
Three Elements of a Successful CRM Strategy

• People – Company employees, from the CEO to the

front-office customer service representatives, sales and
marketing, need to buy into and support CRM.
• Processes - A company's business processes must be
reengineered to reinforce its CRM initiative, often from
the viewpoint of “How can this process best serve
the customer?”
• Technology - Firms must select the right technology to
drive the processes, provide high quality data to
employees, and be user friendly.
Five Principles for CRM Success

1. CRM is not a software purchase – it’s a

strategy
2. CRM must fit the way you work now and
in the future
3. Define measureable CRM business
benefits
4. Consider total cost of ownership carefully
5. Think beyond features: pick the right
partner
CRM metrics
 Benefits of CRM

• Knowing your customers better – personalization and

segmentation Using analytics
• Increase revenues by acquiring new customers and
retaining current customers
• Increased customer satisfaction
• Decrease selling expenses by:
• making fewer yet more productive sales calls
• speeding data analysis
• lowering communication and transactions costs
• eliminating data redundancy
• reducing personnel headcount
CRM Advanced Analytics

• Event monitoring
• Segmentation
• Personalization
• Pricing
• Trending
• Advertising
• Forecasting
• Profiling
• Association
CRM: On-Premise vs. On-Demand

• On-Premise – installing the software on-site on the

company’s own servers
• Traditional method of software implementation
• On-Demand – software is hosted by a third party
service provider
• Software as a Service (SaaS)
Table 7-5: Comparison of Hosted vs. On-Premise Systems
Advantages of Advantages of
Hosted Solutions On-Premise Solutions
Faster deployment Easier to customize
Lower up-front costs Easier to integrate with other applications and data

Reduced upgrade/maintenance requirement Generally less-expensive long-term - typically treated

(capitalized) as an investment rather than an ongoing
expense
Simpler remote/field support Easier to use with more complete functionality in
disconnected/remote environments
Knowledge Management (KM) and CRM

• Knowledge Management (KM) – directed process

of figuring out what information a company has that
could benefit others in the company.
• Companies integrate their CRM systems with KM
because they realize that knowledge plays a key role
in CRM success.
• Both KM and CRM share same goals: to improve
business efficiency and customer satisfaction
• CRM should integrate sophisticated KM across all
CRM domains: marketing, sales and service
Creating a KM system
• KM is a strategic business initiative, complementing
existing organizational objectives.
• Creating a KM system generally involves the
following steps:
• Recognize what employees know, that is valuable and not being
shared
• Create formal procedures to implement the system
• Cre
• ate a knowledgebase including best practices, expertise
directories, and market intelligence
• Make the knowledge available to people that need it
• Give employees incentives for both sharing their knowledge as
well as using others’ knowledge
Identifying Knowledge to Manage

• Skills and knowledge that a company has developed

about how to make its goods and services

• Individual employees or groups of employees whose

knowledge is deemed critical to a company’s continued
success.

• A company’s aggregation of documents about processes,

customers, research results, and other information that
might have value for a competitor

Generally , a formal audit is needed in which companies

try to identify what knowledge they desire and where it
may be located.
Reasons for Knowledge Management Systems

• Sharing of best practices: resulting in saving

millions a year.

• Restructuring, downsizing, and outsourcing.

• Knowledge can command a premium price in

the market (know-how).
• Globalization and competition
• Successful innovation
Obstacles to Successful Knowledge Management

The journey from Knowledge is power to

knowledge sharing is power is the biggest
challenge
• Starting too big
• Relying on technological shortcuts
• Not modeling the behavior
• Treating KM as a one-off project or quick-win
• Ignoring the power of rewards
• Ongoing maintenance