Information Technology in Management : Information Technology in Management A Competitive Imperative
J. Mathew The Evolution of IT in MBA Curriculum : The Evolution of IT in MBA Curriculum Industrial Management Developmental Management Systems Management Slide 3: Paradigm Shift In MBA Education Slide 4: Undisputed leader in the Overnight Package Delivery Business (approximately 45% market share)
Significantly ahead of its main competitors – UPS and DHL
It set the industry pace for rapid growth in the fast-emerging industries of e-commerce and SCM
Operates in more than 212 countries
Transports everything from flowers, medicines and lobsters to computers and electronics Slide 5: Fedex routinely transacts its business using a Web based interface.
Even though the software was widely criticized, it brought repeat customers- a rarity on the web.
In addition to creating the overnight delivery business, Fedex also provided world class logistics services Slide 6: Using its expertise in Information Technology Fedex began offering services like inventory systems, scheduling and routing, and warehousing
Fedex - “The Airline of Internet” – thanks to its logistics, transportation and e:commerce muscle Slide 7: Virtual warehousing, e-commerce and integrated SCM were embraced as the future revenue sources of Fedex.
Companies like Fedex are very strong on IT and thus helped other companies out-source their logistics to Fedex and concentrate on their core activities Slide 8: IT makes it possible to cut down costs
IT-driven electronic enterprise interfaces like Extranet, integrated tracking systems, etc help to cut down lead times drastically
IT also enhances greater customer traffic by placing company related information on the Web Slide 9: Fedex, became experts in the field of IT.
Information Technology is critical to Fedex though it is a transportation and logistics company, not a software development company or manufacturing firm
Fedex started the process of “substituting inventory with information” created “Virtual Warehousing” Slide 10: The technology links that Fedex created with its customers were intimate and difficult to imitate. In fact there is a lock-in arrangement with customers.
But customers saw Fedex’s commitment to technology as a major reason why they didn’t switch to UPS or DHL.
Fedex had pioneered web based package tracking system which was very popular Slide 11: Fedex encouraged business customers to sign in for its Virtual Order platform
Here customers could log into Fedex’s tracking system through Fedex Applications Programming Interfaces (APIs) on their own websites Slide 12: Company Company
Warehouse Customer Tracking Label Shipping Label AWB Label Orders coming
in by fax,
Sales team Dispatch & Delivery I.T. Framework Such real-time global tracking and tracing systems allowed retailers
and customers to follow the progress and completion of each delivery Other Roles of IT : Other Roles of IT IT is critical to change management
IT supports rapid growth
IT helps better understand finance
IT (as in Internet) has changed the Power Structure forever – Power has shifted to the people
IT drives internet retailing (‘e-tailing’) Other Roles of IT contd.,. : Other Roles of IT contd.,. IT drives B2B e-commerce worldwide
IT leads to smaller investments in inventory
IT helped Fedex provide value-added services such as merge-in-transit service Traditional Research-Based Marketing : Traditional Research-Based Marketing Most marketing research approaches study patterns of customers in groups
Surveys examine customer attitudes, preferences and satisfaction in groups
Focus groups identify characteristics, preferences of customer groups
Lost customer research delves into why groups of customers are exiting the company CRM-The New Paradigm : CRM-The New Paradigm Now an emerging and powerful research format studies customers one by one to develop profiles on individual needs, behaviors and responses to marketing
This approach enables a company to get very close to its customers and to customize services uniquely to individual preferences.
This new paradigm is called CRM-Customer Relationship Management CRM-Requirements : CRM-Requirements Individual customer research is founded on a database
This database allows companies to remember each customer uniquely
Hotels, grocery chains, department stores, retail chains use loyalty cards-a CRM idea
Each time a guest uses the service, new observations about preferences are entered so that the provider comes to “know” the guest better CRM Benefits for Customers : CRM Benefits for Customers In case of loyalty programs, personalized point statements, newsletters, reward certificates, individualized news of products in retail stores.
Top 10% (for example) get private toll free number, special amenities.
Gives customers what they want, when they want it, as soon as possible.
CRM is a dialogue – Company talks to customer, customer talks to company Slide 19: “Comping” benefits – complimentary benefits. This strategy of making “high rollers” repeat customers is widely used in gambling industries
Gamblers are tracked on how often they come to casinos, how much money they gamble, what slot machines they use, how much time they spend on those machines, what other extra items do they purchase, number of days they stay at the casino hotel and so on CRM Benefits for Customers Database Applications : Database Applications CRM can be applied virtually in any service where customers make repeat purchases
Underlying the approach is the need for companies to make Customer Information Files (CIFs)
CIFs integrate different streams of information on each customer: demographics, usage info, customer satisfaction data, accounting/financial data CRM advantage for Company : CRM advantage for Company MR is enhanced considerably by using CRM diligently because companies do not have to depend on customers to tell them about their loyalty, they can find out for themselves.
The relation between different demographics and psychographic segments becomes clearer and reduces guesswork Slide 22: A big challenge for front line people: providing quality service to individual customers and at the same time being productive and efficient
These are the people who are both revenue generators as well as customer relationship builders
In many companies this challenge is ongoing CRM advantage for Company Employees Quality versus Productivity: CRM is the solution : Quality versus Productivity: CRM is the solution Sophisticated CRM software has become available to make quality service achievable and efficient
CRM is also called Front Office Automation – this is a rapidly growing sector in software
Major players are Seibel Systems, Nortel Networks, Oracle, SAP, etc CRM is a Productivity Enhancement Tool : CRM is a Productivity Enhancement Tool CRM provides software tools to increase employee productivity in sales, service, customer management
How exactly does it help? AT&T is an example. Incoming calls are screened using sophisticated CRM software and directed to specialist market segment personnel even before the call is picked up. Complete customer history is available and comes on screen as the call matures Slide 25: The person who takes the call is empowered, informed, and capable of answering questions much better than was possible before this technology became available
CRM technology is no longer viewed as an expense. It has made front office people key to a company’s growth
It also gives employees the time to customize service and satisfy individual customers CRM is a Productivity Enhancement Tool CRM is Also Revolutionizing Sales : CRM is Also Revolutionizing Sales IBM is an example where they have implemented a CRM system covering 80000 account users, 30000 business partners and millions of customers
Idea: to integrate the whole company around customers in a consistent manner with the same basic account information
Hence CRM is not merely customer complaint handling but an accessory for increasing sales CRM – The Challenges : CRM – The Challenges Although CRM has great promise and has benefited bottom-lines tremendously, it has its unique challenges
Major monetary and human investments are required
They often require integration of incompatible information systems and significant internal training costs, CRM – The Challenges : CRM – The Challenges Frequently CRM systems fail because companies do not appreciate the effort needed to make it work
Often CRM fails because employees strongly resist change, sometimes even sabotage CRM systems
CRM also fails when it doesn’t have top management support NIKE- A failed CRM system : NIKE- A failed CRM system Nike once set about installing CRM systems in its worldwide operations.
They did not anticipate the difficulty in integrating all of its 24 distinct customer information applications worldwide
They cut down on employee and end-user training on CRM at the wrong time The Future of IT in Services Marketing : The Future of IT in Services Marketing As global corporations become more dependent on IT, it is sure to play a very powerful role in acquiring and maintaining a competitive edge.
It is not an option anymore. Nor can it be done half heartedly.
It is an imperative. It has to be an integral part of every organization’s growth strategy in the 21st century.