Customer Relationship Management (CRM) Technology Impact

Customer Relationship trouble (CRM) Technology ImpactTHE disturb OF CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY ON INFORMATION AND dodge IN THE RETAIL IndustryEXECUTIVE SUMMARYThis report examines CRMs concussion on fostering lend oneself and schema in the sell sector. Regarding CRMs relate on development accustom the reports reveal that CRMs entropy w behousing, automation, mining, friendship solicitude and familiarity overlap capabilities book signifi pecktly exclusivelyudeed how boldnesss retain, get by and propagate selective cultivation to relevant argonas of the dividing line. Key t all(prenominal)ing on purchasing trends, node profiles great deal be kindle so that appropriate modifications keep be made regarding determine, product, promotional and other elements to provide enhanced products and services. CRM, for umteen retail organisations, has meant tuition is now apply as a rise of matched advantage. Examining CRMs sham on brass, th e report illustrates done the MIT90s mannikin that strategic confederation amongst CRM applied science and the organisations mental synthesis, its outline, its raft and purification is essential for engineering to be integrated effectively.The reports findings reveal numerous barriers to CRM. These centre on an over counseling on the technical-requirements than on business strategy, a lack of cross- utilitarian coordination, failure to give birth oversee and evaluate CRM performance, an un open(a) organisational kitchen-gardening to technological shift and an inability to see CRM murder from a holistic begin. An unwillingness to share reading and experience was also highlighted as a capableness inhibitor to unlocking CRM potential. Evidence illustrates that barriers fundamentally fall under a strategic misalignment surrounded by technology, structure, strategy or culture of an organisation. In response, a number of recommendations to aid retail organisations in unlocking CRM potential are provided. These include a holistic perspective towards CRM implementation a focus on strategic alignment betwixt CRM and the organisations strategy, structure, individuals and culture a CRM strategy, outlining its strategic objectives understanding the organisations selective learning ineluctably encouraging organisational mental dexterity to provide a more(prenominal) adaptable structure that CRM technology can be integrated more easily into introducing tailored recruitment and prepare programs to foster the right CRM competencies backed with an effective incentive system and the facilitating a common culture organisational culture emphasising teamwork, empowerment, communicating, innovation and a virile guest orientation.INTRODUCTIONWith managing node relationships now central to organisational winner (Kohli et al, 2001 OHalloran, 2003 Nguyen et al, 2007), exploitation long guest relationships finished usager intensify Customer Rela tionship Management (CRM) technology has moved to the top of the corporate priority list for many retail organisations (Smith, 200687). But what precisely are the subscribe implications CRM has on information and on strategy? and wherefore is that many CRM projects in the past have failed? What can retail organisations do to pick up CRM success? It is these areas that this report seeks to look for deep down a retail sector context. The author has selected to investigate these areas in a retail sector context cod to its sheer growth, pertain and scale of usage within this industry (Anon, 2009). It has revolutionised the way retail companies give data to identify key information trends and thusly elicit and make this knowledge to potentially increase profits (Miller, 1999). The reports main body is thusly split into two sections, with section one examining the impact CRM technology has on information recitation and section two, using the MIT90s mannikin, exploring the pot ential consequences CRM has on strategy for retail organisations. Lastly, barriers associated to boffo CRM implementation are considered and recommendations presented as to how retail organisations can fully unlock and capitalise on their CRM capabilities. incision 1 use up OF TECHNOLOGYThe following section provides an explanation of CRM from a theoretical standpoint, by an analysis of literature definitions and a practical one, in equipment casualty of hardware, software program and data structures.1.1 Explanation of TechnologyThe range of CRM definitions emerging over the old age have provided many interpretations of what precisely CRM is and does (McKie, 2000). Broader, arguably looser definitions follow CRM as a natural progression from relationship marketing (Light, 2001), where information systemsenable organisations to discern a guest focus (Bull, 2005593). Richer, complex definitions view CRM technology enabling organisations via the utilisation of node related information to foster closer relationships with their customers (Levine, 2000 Hsieh, 2009416). more(prenominal) specifically, McNally (2007169) defines CRM as a strategic work out addressing all aspects associated with identifying customers, creating customer knowledge, expression customer relationships, and shaping organisation and product perceptions. Nguyen (et al, 2007103) echoes this, but provides a more simplified version, CRM is a strategic process that helps companies better understand their customers needs so they can provide these needs to their customers at the right m while improving the associations processes. The emphasis on strategic process in the former two definitions fits peculiarly sanitary when explaining how CRM works in the retail sector in terms of hardware, software and data structures. Here transactional data from EPOS sales systems, web systems, sales contact systems systems and loyalty schemes (data) through automated data capture is sent to the c lient server central processor at head office (hardware) where an analysis of relationships (using software) is conducted (Mutch, 2008). It is then(prenominal) data wareho employ and organise in a way that allows the user (with the use of CRM tools) to extract patterns and relationships on distinguished trends, such as information on particular customer profile groups and their purchasing habits, average spend, preference for offers etc. This can then be utilised to identify potential ways of improving gainfulness and disseminated back to relevant departments.1.2 Impact of CRM on Information use in the Retail SectorThe following section analyses CRM technologys impact on information use in the retail sector. Information here is broken wipe out into three main elements data being dim statistics, symbols, numbers, information affect data considered and knowledge the application of data and information (Beynon-Davies, 2009). The relationship between one another is also present ed throughout.1.2.1 Impact of CRM on data useA. Provided more efficient and effective use of data, through warehousing, mining and cross-functional integration.CRMs efficacy for integrating multiple databases across different areas of the retail organisation has force data use in the sense that it has enabled users to have adit to literal time, relevant and accurate customer data. Fallon (2008) and Kaplan (2009) indicate that CRM allows retail companies to absorb raw customer data from multiple sources and integrate it into a centralised CRM system. on that point it is warehoused and later mined so important trends and information can be eli reference workd and utilised (as applied knowledge) to improve customer relationships (Park and Kim, 2003 Chowdhury, 2009). Where CRMs impact on data use lies is that through data warehousing, users with the aid of CRM mining tools, can analyse masses of real time transactional data such as sales amount, transaction time, place and buyer an d non-transactional data, such as customer inquiries/feedback and separate this out into key information on product lines, pricing and customer profile and trends, down to for each one specific retail department and individual store (Miller, 1999). They can then filter back important information and knowledge to solicitude and staff so that the right people at different organisational trains have the necessary know-how to provide enhanced levels of customer service, solve problems and increase favorableness (Park and Kim, 2003).B. Negatively impact as a form of customers surveillanceAmid growing concerns over data sensitivity and the change magnitude cross-referencing sale of data CRM has negatively impacted data use (Bodenberg, 2001 Mutch 2008). lit indicates that CRM technology, with its capability to collect vast amounts of customer data for own strategic purposes, has led to a mass surveillance and monitoring of customer behaviour (Park and Kim, 2003). Consequently, data a ccess and exchange has become more restricted collectible to stringent data protection legislation and company guidelines over the storage, access and lawful use of personnel customer information (Mutch, 2008).1.2.2 Impact of CRM on information useA. Information now used as a source of competitive advantageusing real time data and information enable a real time responseA CRM system allows retail organisations to pull all the transactional and non transactional data together and through the use of CRM tools, extracts key information critical to help coordinate sales, marketing, and customer service departments to better and faster serve customers needs (Smith 2006). In the retail industry CRM has particularly impacted on the way information is used to formulate customer profiles. Organisations can now speedily identify who there customers are, what they buy, how often, the quantities in which they buy etc and use this information to modify pricing, product or service offerings and other elements such as customer service to crap an in-depth understanding of customer needs and provide fair value to all customers (Park and Kim, 2003). Put simply, CRM has impacted information use in that users can quickly provide comprehensive summary reports on critical business information to make informed decisions and responses to reduce costs and increase profitability at a much faster rate (McLuhan, 2001).1.1.3 Impact of CRM on how knowledge is usedA. CRM impacts on organisations potential for improving knowledge retention, get it onment and sharing.knowledge as a resourceLiterature advocates that CRM has enhanced organisations ability to share and utilise knowledge (Krebs, 1998 Fan and Ku, 2010). Reychav (2009235) concurs CRM has improved employees ability to share knowledge both implicit and explicit and thus develop a customer orientation right throughout the business. This is supported by Krebs (1998) although he argues that codifying and storing tacit knowledge to be a much more intricate process. Irrespective, a wealth of evidence indicates CRM has changed the way knowledge is used in terms of how it is shared (Krebs, 1998). For example, in the retail sector, knowledge on particular buying habits of customer groups can be stored on a CRM system at head office where it is accessed by relevant departments (marketing, accounts, sales) who design appropriate promotional deals or joint offers on product lines to increase sales and profitability. This knowledge can than be disseminated to appropriate retail outlets/stores to be implemented.SECTION 2 STRATEGYThe following section examines CRMs impact on strategy within the retail sector and begins with a short outline of the key bonks of CRM that embarrass CRM from fulfilling its potential capabilities in practice. These are conceptualised in the following sections using Scott-Mortons (1991) MIT90s framework (see down the stairs), which stresses strategic alignment and integration of CRM technol ogy within all areas of the business is essential to capitalise on CRM potential.2.1 ContextThe key issues of implementing CRM technology and its impact on business strategy are1. strategic alignment between CRM technology and business retail strategy2. Ensuring the organisations structure works synonymously with CRM technology3. The provision of individual training, recruitment and within this revised stemma descriptions to view the development of necessary competencies to maximise CRM potential4. How organisational culture positively or negatively affect an organisations and its employees ability to use information elicited from CRM technologyThese are now explored in more depth in the following sections using the MIT90s framework theoretical account illustrated below.2.1 StrategyHistory is litter with past CRM failures, Carsdirect.com (Anon, 2000) and Lexmark (Songini, 2002) being perfect examples. McLuhan (2001) and Ramsey (2003) indicate close to CRM failures are due to fo cusing overly on technical-requirements (technological determinism) rather than on the business strategy and the organisations needs. A lack of cross functional coordination, failure to support monitor and evaluate CRM performance and a failure to approach CRM implementation from a holistic approach are some of the other cited reasons as to wherefore CRM projects fail (McLuhan, 2001 Bull, 2003). Other academics argue an unreceptive organisational culture to technological change coupled with an unwillingness to share information and knowledge as inhibitors to unlocking the potential benefits that CRM offers (Kotorov, 2003 Pavlovets, 2005).Essentially the problems cited by literature come under the central issue of strategic alignment, a notion stressed in Henderson and Venkatramans (1993) Strategic coalescence Model and Turbans, et al. (1999) ethnical model, though arguably conceptualised to greater effect in the MIT90s framework (Scott-Morton, 1991) which is predominantly the main framework used in this report. The model advocates that for IT change to be in(predicate), technology moldiness be aligned to the company as a whole, so that organisational strategy, infrastructure, existing technology, individual roles, training programs, trouble and the organisations culture work synonymously with each other (Scott-Morton, 1991). Macredie et al. (1998), supports this perspective, concurring that CRM success is dependent on alignment between organisational strategy, structure and culture. Misalignment between these areas prevents CRM from fully delivering its potential capabilities. For example, if a retail organisations structure restricts CRM access to marketing and old management only than it is un wantly that crucial information will be fed down to nub management and employees at running(a) level (those who interact with customers on a day to day basis) who require it most. Conversely, if the CRM system is not complemented with a recruitment and training policy that is designed to source and develop heart and soul competencies required to use CRM technology efectively, than it will most likely fail. Thus, a strategically aligned approach to information strategy (see appendix look 1), ensuring information systems strategy, information management strategy, information technology strategy and information resource strategy are connected to each other and the overall organizations strategy is a critical success mover for integrating CRM effectively throughout the organisation (Earl, 2000 Van Bentum, 2005). The following sections now turn towards ensuring alignment within other areas of the organisation.2.2 StructureNumerous writers cite the sheer importance of aligning organisational structure with strategy, technology, the surround and its organisational culture (Mintzberg, 1989 Miller, 1989). In other words, to maximise your IT capabilities, an organisations structure must fit with its environment (Burns and Stalker, 1991 Senge, 199 4). all over the years, this has led many retail organisations to shift away from traditional large bureaucratic and hierarchical organisational forms to less traditional divsionalised structures facilitated by business process reengineering. However, evidence suggests such structures not only lose the benefits associated with large-scale bureaucratic organisations such as functional specialism and data interpretation from middle level managers, but also often fail to build strong links between divisions of the business, leading to a loss of shared sum competencies and knowledge (Mabey, Saloman and Storey, 2001 Mutch, 2008). Literature is wherefore indicative neither structure is particularly appropriate when integrating CRM technology. More recently, de-structured organisational forms, with an emphasis on high performance, knowledge creation and the empowerment of teams reflect a more suitable organisational structure in aiding retail organisations to elicit the potential their CRM application offers (Mabey, Saloman and Storey, 2001). Here, structure is build with speed, integration, innovation and flexibility in mind and an adhoc, boundaryless approach more receptive to technology change is instilled throughout the organisation. This hike ups a free flowing information exchange throughout strategic, tactical and operational levels, structuring the organisation in a way where senior and middle management staff at retail organisations disseminate key important information and knowledge to employees at operational level. Where CRM role comes into play, is that it can be used to support these networked/lattice forms of organisations (Zuboff, 1988).It therefore appears that organisational agility, termed by Gunneson (19973) as a flat, fast, flexible organisation, with continuous interaction, support, and dialogues among dissimilar disciplines, with highly decentralized management that recognises what its knowledge base is and how it can manage that base m ost effectively, is an essential component of structure. To achieve this, retail organisations must adopt a lattice/network like structure that has a mix of stability and flexibility to support the organisations capabilities and the empowerment of team running(a) through cross functional teams with a focus on developing the collective intelligence of teams to meet the complexity of the dynamic environment (see Lorrimar, 1999). much(prenominal) a structure is typically flat with large spans of control, features lateral communication and helps develop and maintain a project teamwork ethos and customer focus to keep in line decision-making is guided by customer satisfaction (Friesen, 200533). This increases employee involvement, enhances communication, speeds up decision-making and breaks down boundaries thus enhancing flexibility and capacity to adapt (Clayton, 2006).2.3 RolesLiterature advocates that it is organisational peoples use of CRM, not the technology itself, which is wher e organisations truly capitalise on opening up CRMs full capabilities (McNally, 2007169). Accordingly, recruitment, origin descriptions and individual training should be amended in order to ensure the retail organisations have the right processes and programs in place to ascertain the competencies infallible to utilise CRM technology. Job specifications for staff or librarians accessing CRM should be amended to encourage a proactive approach towards their duties (Owens, Wilson and Abell, 1996). In addition, selection criteria should be familiarised to identify candidates who possess CRM capabilities through IT/CRM related qualification/certificates or direct experience gained through previous employment. Various levels of CRM training programs tailored to each department, and manager should be introduced and should centre on themes which retail procedure and policies regarding data analysis (McKean, 1999), communication competence, such as the use of emails (Ciaborra and Patriotta , 1996) and the ethical use of information to protect the identification of individual customers (Mason, Mason and Culnan, 1995), as well as CRM operational and functional use and how it works across the organisation (Mutch, 2008). The above changes should help retail organisations foster the necessary competencies to ensure CRMs meliorate use throughout the organisation (Alter, 2009). It is argued that these changes (jobs, processes and a lattice/network like structure), supporting richer communication and information sharing, allow workers to become informated by CRM and view the organisation in its totality, making information and processes once hidden, transparent (Zuboff, 1988).2.4 horticultureDifferent aspects of organisational culture impact CRM use both positively and negatively in numerous ways. Van Bentum, (2005) analysis of organisational culture distinguishes between some(prenominal) variants of culture. Of these more mercenary (characterised by heavy inward competiti on and sharp internal and external rivalry) types of culture, often lend themselves to a communication framework that does not match with the knowledge management, knowledge retention and sharing capabilities that CRM offers. This impacts CRM use negatively, creating reluctance on behalf of the individual to use a system that transfers their core knowledge to an internal rival. It is this mismatch between culture and technology that is why many CRM projects fail. Such organisational cultures restrict CRMs knowledge sharing capability and admonish its use by workers (Van Bentum, 2005). Sub-cultures operating within departments or functions of the organisation are also seen to negatively hinder CRM use, often displaying resistance and an unwillingness to change and adapt to CRMs integration (Leverick, et al. 1998). In illustrating a more positive impact culture can have on CRM use, Van Bentum, (2005) advocates a communal culture based on openness, innovation and continuous learning. Here culture positively impacts CRM in the sense that it is embraced by organisational people with a fire customer orientation, who in turn seek to utilise its capabilities to the fullest in their everyday activities. It is this type of culture that retail sector organisations currently operating a mercenary type culture, should move towards.Another cultural aspect impacting CRM use is that organisational peoples belief system regarding CRM ease-of-use and usefulness can have a hearty impact on its performance highlighted (Avlontis and Panagopoulous, 2005). If perceived useful and easy-to-use, CRM leads to performance improvements. Conversely, if perceived as not useful and difficult to use, CRM will have lowly impact on performance and on fulfilling its strategic objectives (Avlontis and Panagopoulous, 2005).The above cultural impacts on CRM use are indicative of a clear correlational statistics between the type of organisational culture and IT performance (Davis, 1989 Avlont is and Panagopoulous, 2005). Literature indicates that retail organisations (particularly management spearheading/championing CRM) must nurture a communal CRM culture through an environment of teamwork, innovation, trust and a receptiveness towards CRM technology in order to ensure its embracement throughout the organisation (Avlontis and Panagopoulous, 2005Van Bentum, 2005). an appropriate cultural foundation, is prerequisite to CRM success.SECTION 3 CONCLUSIONS RECOMMENDATIONSThis report has sought to examine CRMs impact on information use and strategy in the retail sector, revealing some of the reasons was as to why CRM projects fail and recommendations to capitalise on CRM potential. The reports main findings and recommendations are summarised below3.1 KEY FINDINGS1. CRM technology has significantly impacted the relationship between data, information and knowledge and their use in the retail industry. Data and information are now used as a source of competitive advantage. acqu aintance is now seen as a resource through retention and sharing.2. Strategic alignment is a critical for CRM success.3. There are numerous barriers to successful CRM often attributable to a strategic misalignment (summarised in appendix figure 2).3.2 RECCOMENDATIONS1. A holistic perspective towards CRM implementation and strategic alignment between CRM and the organisations strategy, structure, individuals and culture is a critical for CRM success (Scott-Morton, 1991 Macredie, et al. 1998 Bull, 2003).2. A CRM strategy, outlining its strategic objectives and a clear plan for integrating it into the organisations business processes and systems are perquisites for any successful CRM implementation project.3. Understanding data needs and how the data will be used to extract information and elicit knowledge to increase profitability is critical.4. Organisational agility to adapt to contextual factors such as new CRM technology is essential. De-structural changes in specific departments such as implementing flatter structures, introducing cross-functional teams and lateral communication channels is more suited to unlocking CRM potential (Lorrimar, 1999 Mabey, Saloman and Storey, 2001).5. Organisational peoples role in how CRM is used is a major determinant of its success (McNally, 2007). Tailored recruitment and training programs to foster the right CRM competencies supported with an effective incentive system are critical (Avlontis and Panagopoulous, 2005).A communal organisational culture emphasising a strong customer orientation, teamwork, empowerment, communication, innovation, accurate expectations regarding system usage and a receptiveness towards new technology is crucial to elicit employee commitment to CRM (Van Bentum, 2005).APPENDIX* Open focussing on technical-requirements reather than on the business strategy and organisations needs (McLuhan, 2001 Ramsey, 2003)* Lack of cross functional coordination (McLuhan, 2001)* Failure to support monitor and evalua te CRM performance (McLuhan, 2001 Bull, 2003)* Failure to approach CRM implementation from a holistic approach (McLuhan, 2001 Bull, 2003)* An unreceptive organisational culture to technological change (Kotorov, 2003) and sub cultures displaying resistance and an unwillingness to change and adapt to how CRM fits into their running(a) duties acts as a barrier to unlocking CRM potential (Leverick, et al. 1998)* An unwillingness to share information and knowledge as inhibiting CRM potential (Kotorov, 2003 Pavlovets, 2005)