Information Technology in Management

A Competitive Imperative
J. Mathew

The Evolution of IT in MBA Curriculum

Industrial Management

Developmental Management

Systems Management

Paradigm Shift In MBA Education

Pre 2000 Production and Operations Management Marketing Management Post 2000 ERP, CRM, SCM and IT enabled manufacturing. E-business, E-commerce, web enabled marketing, B2B and B2C market places and Cyber exchanges E-HRM, outsourced web based HR management, Distributed HRM etc; Globalized economy, E-enabled financial data bases, IT in markets management etc; ICE or IT Technology components, Networking, Sun and Microsoft and other Technologies, IT management, Knowledge management, Business Intelligence etc.

Human Resources Management Finance Management Systems Management

 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 fastemerging industries of e-commerce and SCM Operates in more than 212 countries Transports everything from flowers, medicines and lobsters to computers and electronics

 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

 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

 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 outsource their logistics to Fedex and concentrate on their core activities

 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

 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

 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 Fedexs commitment to technology as a major reason why they didnt switch to UPS or DHL. Fedex had pioneered web based package tracking system which was very popular

 Fedex encouraged business customers to sign in for its Virtual Order platform Here customers could log into Fedexs tracking system through Fedex Applications Programming Interfaces (APIs) on their own websites

Orders coming in by fax, mail, phone, Sales team

Company Shipping Label

Tracking Label

Dispatch & Delivery

Company Warehouse

Customer

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
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.,.

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

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

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
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

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

CRM Benefits for Customers

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

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

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

CRM advantage for Company Employees

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

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 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

CRM is a Productivity Enhancement Tool

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 companys growth It also gives employees the time to customize service and satisfy individual customers

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

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

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 doesnt have top management support

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

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 organizations growth strategy in the 21st century.