MEETING CUSTOMER'S NEED USING CUSTOMER INFORMATION SYSTEM

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

Business activities have been supported in various perspectives through technological developments. The investments in ICT are not only motivated to achieve strategic business goals (Chircu & Lee, 2003) but to form a competitive advantage (Rocheleau & Wu, 2002) among its clients. ICT is precisely beneficial to the organization (Maha and Hadeel, 2011) and has become a utility that needs to be managed effectively to assist them in achieving their mission and vision (Otiso, Chelangat & Bonuke, 2012). Customer service is a channel in which Information System (IS) is used to gain an advantage as it has affected the ability in the process of innovation in a company (Chen & Tsou, 2012). Customer Information System (CIS) contains a collection of customer data that helps employees in the organizations to make decisions regarding customer. Besides being used as a major storage to record and disseminate customer information, CIS remained to be able to help the organization to make prudent decisions with ease about customers in increasing their competitiveness with others (Huiping, 2011). However, the complexity of information system and high job demands that exceed the employees attention can lead to impaired productivity. To overcome this issue, training program is provided by most organization to enhance their employees’ skills. Agreeing by Kaufman and Hotchkiss (2006), proposing that task productivity among employees has increased after a training program conducted.

2.2 Conceptual underpinnings

Customer Information Management (CIM)

Customer information management (CIM) is the practice of managing customer data in an enterprise. It is a broad-level term that relates to the wider category of master data management. In CIM, IT professionals deal with all of the customer identifiers and data points that exist within a given business architecture.

Customer Information Management (CIM)

One way to describe customer information management (CIM) is to contrast it with similar terms. For instance, customer relationship management is a term for systems and tools that help businesses work better with customers in communications or analyze ongoing deals or potential deals. By contrast, CIM is the process of getting bits of isolated data about customers and managing them as a whole or deploying them to places where they can do the most good.

Customer information management is typically done across an architecture. For instance, if staffers are cross-indexing accounts to provide more readily accessible customer identifiers or names, or account histories, that would constitute CIM. In doing CIM, workers may need to deal with analyzing more structured or less structured data — for example, collecting stray bits of information from Internet forums or mining customer names and numbers from letters or other print communications.

The end goal of CIM is to order all of the information that a business has about customers in any part of its software architecture, breaking down data silos, so that the business has the best intelligence and benefits the most from its data assets.

Task Productivity

Productivity term was commonly used by academic and commercial circles, but it is rarely explained in more detail about its true meaning. Often it is confused and mistakenly thinks that productivity is a term for efficiency, effectiveness and profitability (Tangen, 2005). Theo (2004), define productivity as a condition which producing reward. Essentially productivity is a fruitful, lucrative and profitable that it is synonymous with the relationship between output and input (Brinkerhoff and Dressler, 1990). Measuring user satisfaction in handling their task is essential as satisfaction factors greatly affect productivity (Halkos and Bousinakis ,2010).

User Satisfaction

User satisfaction is very important to increase task productivity and it can be a problem if not addressed. According Halkos and Bousinakis (2010), the organization has two problems that affect employee productivity, which are user satisfaction and work pressure. According to the Halkos and Bousinakis (2010), satisfaction factors greatly affect productivity. This is because, most of the employees work to meet their needs and this leads to a substantial increase in work productivity

2.3 Need for Information Systems

Ask managers to describe their most important resources and they’ll list money, equipment, materials, and people - not necessarily in that order. It’s very unusual for managers to consider information an important resource and yet it is.

The Competitive Business Environment

For many years computer technology was relegated to the backrooms or basements of a corporation. Only the “techies” worried about it and were often the only ones who really knew how it all worked. Now computers are all over the organization - one on every desk. It’s not enough for you to know how to pound a keyboard or click a mouse. It is not even enough for you to know how to surf the Web. Now every employee, including you, must know how to take advantage of Information Systems to improve your organization and to leverage the available information into a competitive advantage for your company.

Emergence of the Global Economy

Next time you purchase a product, any product, look at the fine print and see where it’s made. It could be China, or the Philippines, or India, or even in the USA. You can disagree with the many manufacturing jobs that are being moved from the U.S. to foreign countries. But look at the vast number of jobs that are being created in this country. Maybe they aren’t the traditional factory jobs we’re used to. In fact, many of our new jobs are in the information industry. Many of them service whole new markets that didn’t exist just a few years ago. There was no position called “Webmaster” in 1991 because the Web didn’t exist. But now, that particular job category is one of the fastest growing in the overseas. The global economy I am talking about is being made possible by technology. And that’s why it’s so important that you understand how to use Information Systems Technology instead of just computer technology. There’s a big difference between the two, and we’ll talk about it more.

Transformation of Industrial Economies

“In a knowledge- and information-based economy, knowledge and information are key ingredients in creating wealth.” Think back to the early 1900s when the horse and buggy were the main form of transportation. Along came a guy named Ford who built a whole new industry around the automobile. Many jobs, such as horse groomers, horse shoers, and buggy manufacturers, were lost forever. Now think about all the new jobs that were created - not just in the factories but all the other businesses associated with the car. The people in the horse and buggy industry adapted, retrained for the new jobs, and the whole country changed. The same thing is happening now with the information industry. Many of the new jobs that are being created have better working conditions, better pay, and more advantages than the old jobs had. You just have to be equipped to take advantage of the situation. You have to take advantage of retraining opportunities. You have to gain the skills necessary for the transformation of the industries that have been a mainstay of this country. It’s not that hard - it just takes a lot of hard work. We often think of industries such as manufacturing and financial institutions as information-based. But even farmers and ranchers in this country are learning information-based skills so that they can become more efficient and cut costs. They are taking advantage of the technological explosion by using computers and Global Positioning Systems on their farms and ranches to increase crop yields or reduce workloads. They’re catching on to the idea that Information Systems are a key to success.

Transformation of the Business Enterprise

You can’t help but know about the entire job cuts occurring in our country. It seems like every week we hear about thousands and thousands of people losing their jobs. Back in the 80s most of the job losses were in the blue-collar sector. In the 90s it seems many of the cuts are being made in the white collar, management jobs. Why? Think about it. Technology, to a large extent, has driven organizations to change the way they operate and that includes the way they manage. We’re going to take an in-depth look at how organizations work and how they’ve been transformed by technology. But it isn’t always bad! You just have to ask yourself this question: “With all the job losses in the last few years, many driven by technological changes, why has the Indian unemployment rate dropped to it’s lowest in decades and remained so low?

2.4 Information System as a Strategic Resource

Information can be exploited as a strategic resource at three different levels:

• National • Company • Individual

National Level

Developed nations have adopted the diffusion of information systems and technologies as a national policy. There appear to be two approaches at the national level. Countries like Japan and the United Kingdom have invested in the technical infrastructure first whereas France has determined educating people on how to use IS as a priority in order to enable them to leverage the power of information and communication technologies.

Company Level

Many companies have attained higher product and service quality, shorter product cycles, lower costs and better responsiveness to customer requirements through the use of IS. Information systems allow the automation of certain functions (eg: inventory management or sales order processing), provide critical information for decision making and integrate business processes. Successful companies leverage the power of information as a competitive weapon.

Individual Level

Managers and Information Systems

You will be exposed to information systems as a business professional in whichever field you are working in, be it sales, manufacturing, accounting, finance, banking or consultancy. This is inevitable. You will not only be users of information systems but you will also be expected to analyse the system to identify its strengths and weaknesses, recommend changes for improvement and participate in their implementation. But don’t forget information systems are a means to an end, not an end in themselves. Information systems are powerful valuable tools but not magic. If you automate a business process that is a mess, you end up with an automated mess! Managers must take IS in the context of business activities and purposes and use information as a resource, like money, equipment or energy. Managers must use IS to:

• Access information

• Interprete information

• Incorporate information in decision making Managers must exploit IS because of: • Rapid changes in technology • Intense international competition • Faster product life cycles

• More complex and specialised markets managers:

• Are responsible for investments in IS

• Need to be proactive and selective

• Must understand how IS are used in the functional areas of business.

2.5 The New Role of Information Systems in Organizations

Managers can’t ignore technology any more and pass it off to secretaries or clerical workers or the Information Technology department. Information Systems are critical to the success of an organization at all managerial levels

If you take a look at the above figure you can understand the evolution of Information Systems in organizations. Technology was considered, well, too technical for the rest of us to understand. Computers were relegated to the back room with a few technicians running around in white coats. No one else understood what these people did or how they did it. It was a different world and actually seemed disconnected from the mainstream operations of the company. As the time line indicates, technology and its associated Information Systems are now integrated throughout the organization. Everyone is concerned about technology’s role and impact on their work activities. End users take on greater responsibilities for the success of Information Systems and are actually doing a lot of the work that once belonged to the techies. Even the executive levels of an organization can no longer ignore the technology and pretend that it belongs to someone else. We are constantly bombarded with new tools, new technology, and new methods of doing business. It almost seems as though just as you master a word processing program, here comes a whole new program you have to learn from scratch. But the plain fact is that organizations, especially larger ones, just can’t change as fast as the technology. Companies make huge investments not just in hardware, but in software and persware. Training people, building new operating procedures around technology, and changing work processes take far longer than the technological pace will allow. The introduction of new technology can severely disrupt organizations. Productivity naturally slips. Learning curves cost time and money. Most system installations or changes used to affect mainly data workers or production workers. Now they affect every level of the organization, even the management and strategic levels. Every part of the organization is involved in the introduction or change of technology and everyone plays a part in its success. The Network Revolution and the Internet Even though the Internet as a whole has existed since 1969, the World Wide Web didn’t exist until around 1993-1994. That’s less than 10 years. Now you can’t pick up a magazine or a newspaper, turn on the television or radio, even drive by a billboard, without some kind of reference to “dot com.” Businesses are rushing to the Internet in an effort to keep up with the competition or to create whole new businesses. Now organizations struggle with such issues as how to design and develop a Web site or how to determine a fair email policy for employees. The fastest and biggest change in modern computing is the Internet. To say that the Internet is transforming the way we live, work, and play is probably the greatest understatement in years. Businesses can create new opportunities but they can also lose opportunities just as quickly. Now an organization has to design new systems, or transform old ones, with not just the company in mind, but 100 million other users of the Internet, Extranets, and Intranets. They have to decide how much or how little information to provide in what way, with what level of access, how best to present it, etc. It’s a huge job! New Options for Organizational Design: The Networked Enterprise. Many of the job losses of the 1990s occurred because technology allowed organizations operate efficiently with flatter organizations - with fewer levels of bureaucracy. One manager can now oversee a larger group of people. More important technology increases the span of communication a manager can accomplish with a single email. You can make information available to a greater number of people much more easily than ever before. But wait. You can make that information available to more people, but you have to train them how to use it, and when it’s appropriate to use it and with what latitude they can use it. Again, it all comes back to the “persware” portion of the triangle. Yes, your hardware enables more people to connect to the Information System, and the software is becoming much easier to use and more widespread than ever before. But you still have to concentrate on the people who are using the software to connect to the hardware. Technology now allows workers to work from anywhere. It’s becoming common for companies to literally shift their work through time zones. That is, the person in New York will shift blueprints for a new product to a worker in California. The Californian can then collaborate on the product for an additional three hours before zipping it to another person across the ocean who will work on it while the others sleep. Talk about telecommuting.

2.5 Customer Relationship Management

Although customers are important to all businesses, the Internet and wireless applications add new dimensions to managing customer relationships. One problem is the expanding number of customer contact points, from sales representatives, to call centers, to websites, and wireless connections. Customers expect merchants as suppliers to remember actions and decisions that were made earlier regardless of the method of contact. Consequently, companies need integrated systems that instantly provide all details of customer contacts. The new technologies also provide innovative methods to keep in touch with customers and identify their specific needs to sell additional products and services. Several software tools have been developed to improve customer relationship management (CRM).

Multiple Contact Points

One of the greatest challenges facing a company today is the multiple sources of contact points with customers. Most of the original systems designed to handle these interactions are separate. Salespeople often keep their own records; Internet support systems may not be to-tally connected to the sales fulfillment centers; faxes are rarely integrated into the online customer files. But customers assume that when they talk to one person, that person has records of all the prior interactions. At first glance, it appears that it would be straightforward to build an integrated applica-tion to hold all customer interaction data. Of course, it would be a lot of data and would take time to build the application. But the real challenge lies in getting everyone to enter all of the data. Consider the situation of a salesperson who has invested time and collected sub-stantial data on product preferences and customer work environments. That information gives an advantage to the salesperson. Why would the salesperson be willing to share it? Customers with multiple divisions and many different product tracks also add complica-tions to CRM. The system has to be able to track transactions, questions, and issues by a variety of factors (date, product, company, person, and so on). The system also needs a so-phisticated search routine so users can find exactly the pieces of data required.

Feedback, Individual Needs, and Cross Selling

The main purpose of CRM systems is to provide individual attention to each customer to im-prove sales. By tracking prior purchases, you understand the status of your customers. By providing new channels of communication, you improve the ability of customers to provide feedback to comment on products and services and to make suggestions for improvements. By identifying patterns in purchases, you can develop new ideas for cross selling, If a group of customers tends to purchase several products, you can search the CRM database to find customers with only part of the solution, and have your salespeople demonstrate the advan-tages of the entire suite— using the other customers as examples and references. The flip side to CRM is that collecting and coordinating substantial data about the cus-tomer can lead to privacy problems. As long as the data is secured and used internally, few problems arise. But firms still need to be sensitive to customer wishes about unsolicited con-tacts. In fact, customer privacy requests need to be part of the CRM system. The issues are more complex when the selling firm has multiple divisions, and each one wants to push new products to existing customers. The marketing staff needs to use the CRM system to coordinate and monitor all contacts. Wireless applications provide even more options for CRM. Your salespeople can stay in constant contact with the corporate database. They can retrieve current shipping status, or detailed customer information during a sales call. They can forward questions or comments, which can be analyzed and answered immediately.

Decision models of customers

Illustration #2. A bank (total assets, Oct. 31, 1982, $45,038 million) offers multiple accounts (checking, daily interest, monthly interest, and so forth) to a customer. When a customer has overdrawn the checking account, the bank assumes that the customer would prefer to transfer an amount from another account (say, daily interest account) to the checking account to keep the check

from being “returned to drawer.*’ The bank assumes that the customer would not prefer the monetary and other costs of a check returned for lack of funds. The bank keeps transferring amounts needed from the other account as more checks arrive for payment, and each time the customer incurs service charges. Further, the bank assumes that the customer does not desire to transfer

enough funds to maintain a minimum balance and thus avoid monthly service charges on the checking account, even though this might be the profile of the customer over the past several years.

An information system is essentially an allocation of tasks between man and machine [2, pp.19-201. Which gets the task depends upon the comparative advantage of one over the other [6]. If there is a single, predominant model, the task incorporating the model can be handled by machine.

If, on the other hand, several competing models exist, it riright be preferable to assign responsibility for the task to a person within the organization, or allow the customer to make the final decision by simply communicating pertinent

information. However, this option might also be expected to increase the cost of servicing customers.

The allocation of task to customers is quite visible in the student registration systems of large universities where students personally assess classes

and times available at the time they register and make their choices. Regardless of the final decision to allocate the task to man or machine, it is

important for the organization to know at least the customers’ decision models.

Customer relationship marketing In this competitive environment, a business organization cannot survive longer with a transactional attitude towards customers. It has been very important to focus on marketing lenses which are considered as a major aspect for satisfying and maintain customers. In this context, it has been clear that customer satisfaction is entitled as an important theoretical and practical issue for the marketers and the researchers (Rakhsha & Majidazar 2011.)

Satisfaction is the feeling of the individuals after comparing product and service performances with their expectations. If the business organization meets the expectations of the customers, then there is the possibility of a long-term relationship (Kotler 1996.) Customer relationship marketing is the biggest paradigmatic shift in marketing theory and practical in the existing world. It is concerned with attracting, developing and retaining customer relationship (Berry & Parasuraman 1991.)

To identify, establish, maintain, enhance and terminate the relationship with customers and other stakeholder customer relationship marketing plays a crucial role. Moreover, it is the best contemporary marketing strategies for the companies to satisfy their customers’ needs and wants. Along with this, it has evolved from the direct response marketing, it focuses more on customer retention and satisfaction of their needs. Instead of focusing on delivering and selling the products, many companies are targeting in developing and marketing long-term relationships with customers and this is defined as a relationship marketing. Enhancement and focus on the customer, building relationships with the customers have become necessary for the companies in the past few years because business success depends on clients. Therefore, companies are trying to keep the existing customers through which it will easier to gain the steady income. Once the customers are attracted towards the firm, they are more likely to stay in the relationship when they are constantly supplied with quality products and services and good value over time. Under relationship marketing, loyalty, long-term relationship and customer retention are three factors that determine the profitability of the business. It is true that if the customers are satisfied they are willing to pay more for the products and services and maintain a long-term relationship. Therefore, the business organization should make an effort to understand the core factor of the business to increase the customers.

A core element in building up of meaningful customer relationship is to stay in touch with the organization. Customer seeks better quality service from the companies, whereas firm pays attention to the needs and wants of the clients. Marketing research is an essential element in the relationship marketing. Another great way is to get a feedback of people’s wants and needs. Relationship marketing helps to increase the profitability and competitive advantage through the globalization of world markets. Moreover, relationship also helps to understand the customers demand.

Gaining the retention of the customer is another element that influences the customer relationship marketing. With the customer relation marketing approach, a company is focused more on how to retain customers as opposed to simply how to acquire more customers. In summary, customer relationship marketing is a major shift in marketing practice, from mass marketing to individualized marketing.