INTERNATIONAL CONFERENCE ON MANAGEMENT (ICM 2011) PROCEEDING

CUSTOMER RELATIONSHIP MANAGEMENT IN ORGANIZATIONS

Setareh Feiz*, Doctor Zeinab Bte Khalifah*, and Ali Ramezani Ghotbabadi * Customer Relationship Management (CRM) can be workable for all organizations. This system needs a very precise scheduling. In every industry, creating a good relationship with customers is the important issue. This article tries to investigate the CRM as the combination of people, processes, and technology. Organizations will have a successful CRM implementation if they consider people, process, and technology either one by one or together. The main objective of this article is to explore how CRM failures can be minimized in various organizations. Key Words: Technology. Customer Relationship Management, People, Process,

1. Introduction
Customer Relationship Management (CRM) is the customer-focused business strategy which is not a new concept. Although CRM is more about the customer, it cannot be successful by this definition alone. CRM should be performed in organizations as the combination of three main concepts: people, processes, and technology. Customer relationship management (CRM) is a combination of people, processes, and technology (Chen and Popovich, 2003) that seeks to provide understanding of customer needs (Stringfellow et al., 2004), to support a business strategy (Ling and Yen, 2001; Bull, 2003), and to build long-term relationships with customers (Wayland and Cole, 1997). To increase relationships with all customers the integration of these three is essential. Applying CRMs system in one organization means a change in different areas of the business and seeks a proper balance of people, processes, and technology. One of the main reasons of CRM failures is considering technology as the main part of the system. CRM project success will happen if the CRM users investigate people, process, and technology either one by one or together.
* Setareh Feiz, Faculty of Management, UTM University. Email: feiz_setare@yahoo.com * Doctor Zeinab Bte Khalifah, Faculty of Management, UTM University. * Ali Ramezani Ghotbabadi, Faculty of Management, UTM University. Email: zaosra@yahoo.com

2. CRM
2.1 People The people component is the most difficult one in order to adjust employees/staffs to the changes. Those users, who do not have an understanding of the reasons for the changes, usually oppose that change. CRM initiatives require vision and each and every employee must understand the purpose and changes that CRM will bring. CRM success will be in danger by negative feedback. Implementation of enterprise
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technology, such as CRM and ERP, requires changes to organizational culture (AlMashari and Zairi, 2000). While both technology and business processes are crucial to successful CRM initiatives, the attention is back on individual employees who are the basis of the customer relationship. Along several important elements regarding to management and employee team that successful CRM system requires, top management commitment plays the main role.

2.1.1

Top management

Top management commitment is more essential than CEO attention to the CRM project. This view was reinforced in a recent META Group Report (1998) that singled out top management support and involvement as a key success factor for CRM implementations. Customer-centric management requires top management support and commitment to CRM throughout the entire CRM implementation. Moreover, top management should provide the stage in CRM initiatives for leadership, strategic direction, and alignment of vision and business goals (Herington and Peterson, 2000). Dickie (1999) also warns against starting a CRM project if senior management does not fundamentally believe in re-engineering a customer-centric business model. Top management must show its commitment to development of company education and training programs, and also enhancing employee skills and knowledge. Furthermore, it should be noted that education increases motivation and commitment of employee and reduces employee disagreements. In addition to these, different reward programs such as compensation programs and reward systems for employees should be considered by management. CRM projects require absolute attention of all members of the organizational departments such as sales, marketing, manufacturing, customer services, information technology, etc. Cap Gemini and IDC found that top management and marketing and sales management are generally the initiators of a corporate CRM project (1999). In addition, project teams require not only sponsorship by top management but also a project champion that can persuade top management for continuous efforts to change (Al-Mashari and Zairi, 1999). 2.2 Process The process component of CRM is the most delicate one because inappropriate process is the same as continuing your work aimlessly. When the company aims to create an effective process change, first of all it seeks to know the function of existing customer-facing business processes. Then the company needs to redesign or replace the process with ones that have been created and/or agreed upon internally. As an example, the replacement or updating of the business processes happens for most companies that have the process of direct contact with the customers during the purchase, payment, and usage of the company's products and services. Couldwell (1998) depicts CRM as a combination of business processes and technology that seeks to understand a companys customer from the perspective of who they are, what they do, and what they are like. It should be considered that
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companies have been repeatedly warned that failure is eminent if they believe that CRM is only a technology solution (Goldenberg, 2000). The shortage of customerfacing process will not compensate by purchasing CRM software, the solution is agreeing internally on how users would like a process to be done. In fact, Anton (1996) characterizes CRM as an integrated approach to managing customer relationships with re-engineering of customer value through better service recovery and competitive positioning of the offer. A recent Deloitte Consulting survey of more than 900 executives across different industries also revealed that manufacturers that set goals for improving customer loyalty are 60 percent more profitable than those without such a strategy (Saunders, 1999). A CRM strategy can help create new customers, and more importantly, develop and maintain existing ones. The goals of a customer-centric model are to increase revenue, promote customer loyalty, reduce the cost of sales and service, and improve operations. Renner (2000) emphasized that optimizing customer relationships requires a complete understanding of all customers; profitable as well as non-profitable, and then to organize business processes to treat customers individually based on their needs and their values. 2.3 Technology The technology component is the toughest one, because there are a lot of technology offerings and alternatives. There are two issues related to technology: dealing with CRM software vendors and staying on top of CRM technology trends. CRM is a strategy that puts together a combination of Information Technology (IT) with business processes and services such as Data Warehouse Technology and Enterprise Resource Planning (ERP) Technology.
2.3.1 Information Technology

Whereas CRM collect and analyze data on customer patterns and also deliver customer data by accumulating, storing, maintaining, and distributing customer knowledge throughout the organization, CRM takes so much advantage of different dimensions of technology. Technology innovations have the ability of interpreting customer behavior, developing predictive models, responding with timely and effective customized communications, and delivering product and service value to individual customers. Using technology to optimize interactions with customers, companies can create a 360 degree view of customers to learn from past interactions to optimize future ones (Eckerson and Watson, 2000). Information Technology (IT) has long been recognized as an enabler to radically redesign business processes in order to achieve dramatic improvements in organizational performance (Davenport and Short, 1990; Porter, 1987). IT assists with the re-design of a business process by facilitating changes to work practices and establishing innovative methods to link a company with customers, suppliers and internal stakeholders (Hammer and Champy, 1993). Innovations in network infrastructure, client/server computing, and business intelligence applications are the main elements in CRM development. In CRM, an effective management of information has an efficient role. Information is critical for product tailoring, service innovation, consolidated views of customers, and calculating customer lifetime value
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(Peppard, 2000). Among others, data warehouses, and enterprise resource planning (ERP) systems are main infrastructures to CRM implementations.
2.3.1.1 Data Warehouse Technology

Data warehouse is the most popular and most needed of systems for providing CRM operating systems such as HR, sales and transaction processing, financial, inventory, purchasing and marketing. Specifically, data warehouses extract, clean, transform, and manage large volumes of data from multiple, heterogeneous systems, creating a historical record of all customer interactions (Eckerson and Watson, 2000). Constantly extracting knowledge about customers reduces the need for traditional marketing research tools such as customer surveys and focus groups. Thus, it is possible to identify and report by product or service, geographic region, distribution channel, customer group, and individual customer (Story, 1998). Data warehouse causes instant access to information throughout the organization and also makes CRM possible because it consolidates, correlates, and transforms customer data into customer intelligence that can used to form a better understanding of customer behavior. Customer data includes all sales, promotions, and customer service activities (Shepard et al., 1998). In addition to transaction details, information related to billing and account status, customer service interactions, back orders, product shipment, product returns, claims history, and internal operating costs can improve understanding of customers and their purchasing patterns too. A corporate awareness survey conducted jointly by Cap Gemini and International Data Corporation (1999) found that 70 percent of US firms and 64 percent of European firms plan on building a data warehouse to support their CRM projects. SAS Corporation, a significant player in the data warehouse industry, has recently teamed with Peppers and Rogers Group to provide CRM Resource, a weekly guide on industry-focused CRM. A brief outline of organizational benefits with a data warehouse is: Accurate and faster access to information to facilitate responses to customer questions; Data quality and filtering to eliminate bad and duplicate data; Extract, manipulate and drill-down data quickly for profitability analysis, customer profiling, and retention modelling; Advanced data consolidation and data analysis tools for higher level summary as well as detailed reports; and Calculate total present value and estimate future value of each and every customer.

2.3.1.2 Enterprise Resource Planning (ERP) Technology

The implementation of Enterprise Resource Planning (ERP) produces an improvement in the quality and efficiency of business processes. However, when the majority of companies in a sector have optimised their internal processes, this
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improvement becomes a condition that is necessary to remain in the market, but ceases to be a competitive advantage (Dyche, 2001). Successful ERP links all areas of a company. The management, manufacturing, human resources, financial systems and distribution will connect to external suppliers and customers into a tightly integrated system with shared data and visibility (Chen, 2001). Organizations with successful ERP marketing, are preparing themselves for creating a good relationship with CRM or taking over other software companies that have been operating in the CRM market. ERP technology and CRM applications have significant differences. Table 1 shows these differences.
TABLE1. Significant differences between ERP technology and CRM applications

ERP Technology
Serves as a strong foundation with tightly integrated back office functions Promises to integrate all functional areas of the business with suppliers and customers Addresses fragmented information systems

CRM Application
Strives to link front and back office applications to maintain relationships and build customer loyalty Promises to improve front office applications and customer touch points to optimize customer satisfaction and profitability Addresses fragmented customer data

CRM applications are web-enabled and designed to extend the data mining capabilities of ERP throughout the supply chain to customers, distributors, and manufacturers (Scannell, 1999). Organizations can use CRM analytical capabilities to predict and answer key business questions on customer intelligence and share the results across channels. Although ERP is not required for CRM, providing customers, suppliers, and employees with web-based access to systems through CRM will only be beneficial if the underlying infrastructure, such as data warehouses and/or ERP, exists (Solomon, 2000). Companies with an ERP system, however, need to understand where they are in the implementation process, as well as assess where other technologies, such as data warehouses, fit in before plunging into CRM applications (Saunders, 1999).

3. Integrating People, Process and Technology

The following table provides a generic model for understanding how the mix of people, processes, and technology will change for the key CRM implementation activities (Barton and Goldenberg, 2002). This generic model needs to be adjusted for each company, taking into account that different companies will realize key CRM implementation activities from different perspective.
TABLE2. Developing the right mix of people, process, and technology

Key CRM Implementation Activities

Determining business requirements Setting up the project 300

Most Relevant Components

People, some process People, some process

INTERNATIONAL CONFERENCE ON MANAGEMENT (ICM 2011) PROCEEDING

management team Integrating legacy and other needed systems Customizing the CRM software CRM system pilot CRM system roll-out CRM system support Growing your CRM system

Technology People, process, technology People, technology People, technology People, some process People, process, technology

As an example, let's look at the first CRM implementation activity in Table 2 to better understand the dynamics of getting the right mix. To determine business requirements, a company will want to apply a structured process to ensure that user needs are properly identified and prioritized. Most of the effort for determining business requirements, however, will deal with people issues, namely working with potential users to help them think through their existing and potential business requirements, and to help them manage their expectations concerning how the CRM initiative is likely to impact these requirements. Technology plays a minor role at best in determining business requirements. In general, to achieve a successful CRM application, it is better for companies to take the time to understand those instances, impacting people, process, and technology components individually, but also to take action to manage the integration of all three to be sure the right mix during all phases of the CRM initiative.

4. Conclusion
CRM requires a customer-centric business environment to support effective marketing, sales, and service processes (Oldroyd, 2005; Bolton, 2004). Many firms have switched from a product-centric to a customer-centric culture, which emphasizes the whole customer experience (Davenport et al., 2004). Investigating CRM elements (people, process, and technology) one by one and together shows their high value in managing a proper customer relationship. The main business drives of CRM are increasing customer lifetimes, reducing costs, and improving efficiency. The main obstacles to becoming customer-centric are poor performances in some areas. In addition to these, the method used here is personal opinion; the article believes that re-engineering a customer-focus business model in organizations needs the integrating of the main parts of each element, mixing of the related activities, and eliminating of those which do not add any value to organization and customers. Moreover, successful implementation of CRM means significant changes in some jobs, so it seeks the instant adjustment of employees with those cultural changes which create by CRM implementation.

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