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Q7-4 How Do CRM, ERP, and EAI Support Enterprise Processes?

to obtain data about discharges until the next midnight. Consequently, considerable food was
wasted at substantial cost.
With the enterprise system, the kitchen can be notified about patient discharges as they occur
throughout the day, resulting in substantial reductions in wasted food. But when should the kitchen
be notified? Immediately? And what if the discharge is cancelled before completion? Notify the
kitchen of the cancelled discharge? Many possibilities and alternatives exist. So, to design its new
enterprise system, the hospital needed to determine how best to change its processes to take advan-
tage of the new capability. Such projects came to be known as business process reengineering,
which is the activity of altering existing and designing new business processes to take advantage of
new information systems.
Unfortunately, business process reengineering is difficult, slow, and exceedingly expensive.
Business analysts need to interview key personnel throughout the organization to determine how
best to use the new technology. Because of the complexity involved, such projects require high-
level, expensive skills and considerable time. Many early projects stalled when the enormity of the
project became apparent. This left some organizations with partially implemented systems, which
had disastrous consequences. Personnel didn’t know if they were using the new system, the old
system, or some hacked-up version of both.
The stage was set for the emergence of enterprise application solutions, which we discuss next.

Emergence of Enterprise Application Solutions

When the process quality benefits of enterprise-wide systems became apparent, most organizations
were still developing their applications in-house. At the time, organizations perceived their needs
as being “too unique” to be satisfied by off-the-shelf or altered applications. However, as applica-
tions became more and more complex, in-house development costs became infeasible. As stated in
Chapter 4, systems built in-house are expensive not only because of their high initial development
costs, but also because of the continuing need to adapt those systems to changing requirements.
In the early 1990s, as the costs of business process reengineering were coupled to the costs of
in-house development, organizations began to look more favorably on the idea of licensing preex-
isting applications. “Maybe we’re not so unique, after all.”
Some of the vendors who took advantage of this change in attitude were PeopleSoft, which
licensed payroll and limited-capability human resources systems; Siebel, which licensed a sales
lead tracking and management system; and SAP, which licensed something new, a system called
enterprise resource management.
These three companies, and ultimately dozens of others like them, offered not just software and
database designs. They also offered standardized business processes. These inherent processes,
which are predesigned procedures for using the software products, saved organizations from the
expense, delays, and risks of business process reengineering. Instead, organizations could license the
software and obtain, as part of the deal, prebuilt processes that the vendors assured them were based
on “industry best practices.”
Despite the clear benefits of inherent Some parts of that deal were too good to be true because, as you’ll learn in Q7-5, inherent pro-
processes and ERP, there can be
an unintended consequence. See cesses are almost never a perfect fit. But the offer was too much for many organizations to resist.
the Guide on pages 316–317 and Over time, three categories of enterprise applications emerged: customer relationship management,
consider that risk. enterprise resource planning, and enterprise application integration. Consider each.

Customer Relationship Management (CRM)

A customer relationship management (CRM) system is a suite of applications, a database,
and a set of inherent processes for managing all the interactions with the customer, from lead
generation to customer service. Every contact and transaction with the customer is recorded in
the CRM database. Vendors of CRM systems claim that using their products makes the organiza-
tion customer-centric. Though that term reeks of sales hyperbole, it does indicate the nature and
intent of CRM packages.