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

medicines and lobsters to computers and electronics .• 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.

Fedex also provided world class logistics services .a rarity on the web.• Fedex routinely transacts its business using a Web based interface. • Even though the software was widely criticized. it brought repeat customers. • In addition to creating the overnight delivery business.

transportation and e:commerce muscle .“The Airline of Internet” – thanks to its logistics. scheduling and routing.• Using its expertise in Information Technology Fedex began offering services like inventory systems. and warehousing • Fedex .

• 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 .

integrated tracking systems.• IT makes it possible to cut down costs • IT-driven electronic enterprise interfaces like Extranet. 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. not a software development company or manufacturing firm • Fedex started the process of “substituting inventory with information” created “Virtual Warehousing” . • Information Technology is critical to Fedex though it is a transportation and logistics company.

In fact there is a lock-in arrangement with customers. • Fedex had pioneered web based package tracking system which was very popular .• The technology links that Fedex created with its customers were intimate and difficult to imitate. • But customers saw Fedex‟s commitment to technology as a major reason why they didn‟t switch to UPS or DHL.

• 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 .

phone. mail. 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 .Orders coming in by fax.

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 of customer groups • Lost customer research delves into why groups of customers are exiting the company . preferences and satisfaction in groups • Focus groups identify characteristics.

CRM-The New Paradigm • Now an emerging and powerful research format studies customers one by one to develop profiles on individual needs. • This new paradigm is called CRM-Customer Relationship Management . 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.

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-Requirements • Individual customer research is founded on a database • This database allows companies to remember each customer uniquely • Hotels. department stores. grocery chains.

personalized point statements. • Gives customers what they want. special amenities. newsletters. when they want it. as soon as possible. individualized news of products in retail stores. • CRM is a dialogue – Company talks to customer. reward certificates. • Top 10% (for example) get private toll free number.CRM Benefits for Customers • In case of loyalty programs. customer talks to company .

what slot machines they use.CRM Benefits for Customers • “Comping” benefits – complimentary benefits. number of days they stay at the casino hotel and so on . what other extra items do they purchase. 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. how much time they spend on those machines.

usage info.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. customer satisfaction data. accounting/financial data .

• The relation between different demographics and psychographic segments becomes clearer and reduces guesswork .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.

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. SAP. etc . Nortel Networks. Oracle.

CRM is a Productivity Enhancement Tool • CRM provides software tools to increase employee productivity in sales. service. Incoming calls are screened using sophisticated CRM software and directed to specialist market segment personnel even before the call is picked up. customer management • How exactly does it help? AT&T is an example. 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. 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 . 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.

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 .

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 • Although CRM has great promise and has benefited bottom-lines tremendously.

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 .

A failed CRM system • Nike once set about installing CRM systems in its worldwide operations.NIKE. • 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 .

It has to be an integral part of every organization‟s growth strategy in the 21st century. • It is an imperative. 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.The Future of IT in Services Marketing • As global corporations become more dependent on IT.

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