Chapter 11 Building a Customer-centric Organization--Customer Relationship Management

Learning outcomes

11.1 Compare operational and analytical customer relationship management.

11.2 Identify the primary forces driving the explosive growth of customer relationship management.

11.3 Define the relationship between decision making and analytical customer relationship management.

11.4 Summarize the best practices for implementing a successful customer relationship management system.

 

 

Customer Relationship Management (CRM)

CRM is a business philosophy based on the premise that those organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the future.

- A customer strategy starts with understanding who the company's customers are and how the company can meet strategic goals.

- As the business world increasingly shifts from product focus to customer focus, most organizations recognize the treating existing customers well is the best source of profitable and sustainable revenue growth in the age of e-business, however, an organization is challenged more than ever before to truly satisfy its customers.

Recently, Frequency, and Monetary Value

An organization can find its most valuable customers by using a formula that industry insiders call RFM-recency, frequency, and monetary value. In other words, an organization must track:

- How recently a customer purchased items (recently)

- How frequently a customer purchases an item (frequently

- How much a customer spends on each purchase (monetary value)

The evolution of CRM

Knowing the customer, especially knowing the profitability of individual customers, is highly lucrative in the financial service industry.

There are three phases in the evolution of CRM:

1.                               CRM Reporting technology help organizations identify their customers across other applicants

2.                               CRM analysis technology helps organizations segment their customers into categories such as best and worst customers.

3.                               CRM predicts technological help organizations make predictions regarding customer behavior such as which customers are at risk of leaving.

The Ugly Side of CRM: Why CRM Matters More Now than Ever Before

Now companies have no choice as the power of the customer grows exponentially as the internet grows. In every case, customers have become an integral part of the action as a member of the aggregated, interactive, self-organizing, auto-entertaining audience on businesses. However, this should no be a surprise, since it was the customers crazy passion and hobbies and obsessions-that build up the web in the first place.

Customer Relationship Management's Explosive Growth

When customers buy on Internet, they see, and they steer, entire value chains.

- Customer web interaction become conversations, interactive dialogs with shared knowledge, not just business transaction. Web- based customer care can actually become the focal point of customer relationship management and provide breakthrough benefits for both the enterprise and its customers, substantially reducing costs while improving service.

- Current users allow allocating 20 percent of their IT budget to CRM solutions.

DISPLAY THE TOP CRM BUSINESS DRIVERS

Using Analytical CRM to Enhance Decisions

The two components of a CRM strategy are:

- Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers.

- Analytical CRM supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers.

The primary difference between operational CRM and analytical CRM in the direct interaction between the organization and its customers.

-Personalization occurs when a website can know enough about a person's likes and dislikes that it can fashion offers that are more likely to appeal to that person. Many organizations are now utilizing CRM to create customer rules and templates that marketers can use to personalize customer messages.

Customer Relationship Management Success Factor

CRM solutions make organizational business processes more intelligent. This is achieved by understanding customer behavior and preferences, then realigning product and service offering and related communications to make sure they are synchronized with customer needs and preferences. If an organization is implementing a CRM system, it should study the industry best practices to help ensure a successful implementation.

Using he analytical capabilities of CRM can help a company Anticipate customer need and proactively serve customers in way that build relationship, create loyalty, and enhance bottom lines.

Chapter 9 Enabling the Organization --Decision Making

Question 1       Which of the following is not a reason for the growth of decision-making information systems?

People need to analyze large amounts of information

People must make decisions quickly

People no longer have to worry about protecting the corporate asset of organizational information

People must apply sophisticated analysis techniques to make good decisions

Question 2       What can a model accomplish?

Calculate risks

Understand uncertainty

Manipulate time

All of the above

Question 3       Which of the following is a quantitative model typically used by a DSS?

Sensitivity analysis

What-if analysis

Goal-seeking analysis

All of the above

Question 4       What is the study of the impact that changes in one (or more) parts of the model have on other parts of the model?

Sensitivity analysis

What-if analysis

Goal-seeking analysis

Drill-down

Question 5       What finds the inputs necessary to achieve a goal, such as a desired level of output?

Goal-seeking analysis

Drill-down

What-if analysis

Sensitivity analysis

Question 6       Which company offers a strategic business information service using artificial intelligence that enables organizations to track the product offering, pricing policies, and promotions of online competitors?

Verizon Communications

BostonCoach

Burlington Northern and Santa Fe Railroad

RivalWatch

Question 7       What checks the impact of a change in an assumption on the proposed solution?

Sensitivity analysis

Drill-down

Goal-seeking analysis

What-if analysis

Question 8       What enables users to get details, and details of details of information?

Consolidation

Drill-down

Digital dashboards

Slice-and-dice

Question 9       Which of the following is NOT a form of Articficial Intelligence?

Expert Systems

Neural Networks

Fuzzy Agents

Genetic Algorithms

Question 10     The ultimate goal of AI is the ability to build a system that can mimic human intelligence.

True

False

Question 11     Sensitivity analysis, what-if analysis, and market basket analysis are the three quantitative models typically used by a DSS.

True

False

Question 12     Consolidation, drill-down, and slice-and-dice are the three most common capabilities offered in an EIS.

True

False

Question 13     A shopping bot is one of the simplest examples of an intelligent agent.

True

False

Question 14     An executive information system is a specialized DSS that supports senior level executives within the organization.

True

False

Question 15     A Decision Support System typically relies on external sources of information while an Executive Information System does not.

True

False

Question 16     What is consolidation?

Enables users to get details, and details of details, of information

Finds the inputs necessary to achieve a goal such as a desired level of output

Involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information

The ability to look at information from different perspectives

Question 17     What is drill-down capability?

The ability to look at information from different perspectives

Finds the inputs necessary to achieve a goal such as a desired level of output

Enables users to get details, and details of details, of information

Involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information

Question 18     What is slice-and-dice capability?

Enables users to get details, and details of details, of information

The ability to look at information from different perspectives

Finds the inputs necessary to achieve a goal such as a desired level of output

Involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information

Question 19     What integrates information from multiple components and tailors the information to individual preferences?

Drill-down

Digital dashboards

What-if analysis

Sensitivity analysis

Question 20     What are various commercial applications of artificial intelligence?

Digital dashboard

Sensitivity analysis

Intelligent system

Drill-down

Question 21     What is a category of AI that attempts to emulate the way the human brain works?

Neural network

Artificial intelligence

Expert systems

Intelligent system

Question 22     Which of the following is the most commonly used form of AI in the business arena?

Expert system

Artificial intelligence

Intelligent system

Neural network

Question 23     What is a special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users?

Intelligent agent

Neural network

Intelligent systems

Artificial intelligence

Question 24     What is an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem?

Genetic algorithm

Artificial intelligence

Neural network

Intelligent system

Question 25     Which of the following represents the top-down (executives to analysts) organizational levels of information technology systems?

TPS, DSS, EIS

DSS, TPS, EIS

EIS, DSS, TPS

None of the above, it varies from organization to organization

Question 26     Which of the following is an incorrect enterprise view of information technology?

Processes are analytical for executives and transactional for analysts

Granularity is coarse for executives and fine for analysts

Processing is OLTP for executives and OLAP for analysts

None of the above

Question 27     Which of the following is a type of transaction processing system?

Manufacturing

Transportation

Order-entry

Sales

Question 28     Which company has "The Wall of Shaygan", which is a digital dashboard that tracks 100-plus IT systems on a single screen?

RivalWatch

Verizon Communications

BostonCoach

Burlington Northern and Santa Fe Railroad

CHAPTER8 - ACCESSING ORGANIZATIONAL INFORMATION (DATA WAREHOUSE)

This chapter is about assessing organization information by data warehouse. A data warehouse is a logical collection of information which is gathered from many different operational database. It supports business analysis activities and decision making tasks. 

Data warehouse- A data warehouse is a collection of data, usually current and historical, from multiple databases that the organization can use for analysis and decision making. The purpose, of course, is to bring key sets of data about or used by the organization into one place.

Data mart- Data marts are related sets of data that are grouped together and separated out from the main body of data in the data warehouse.

The purpose of data warehouse is to aggregate information throughout an organization into a single repository in such way that employee can make decision and undertake business analysis activities.

besides that, database store all the transaction such as sales of product.

The roles of data mart is easily to employee to access the data information. Other than that, data marts as having focuses information subsets particular to the needs of a given business unit such as finance or production and operations.

Business intelligence usually refers to the information that is available for the enterprise to make decisions on. A data warehousing (or data mart) system is the backed  or the infrastructural, component for achieving business intelligence. Business intelligence also includes the insight gained from doing data mining analysis, as well as unstructured data (thus the need of content management systems). Let me give the path of Data warehousing. All the source data from disparate sources are used to load/Stage data. Different sources can be flat files, another database or some other process. The starting point of the Data warehouse should extract the data in order to load into its environment.This is extracting. This data may not be the expected format or size. your business demands are different or your organization business requirements are different. So the business process has to modify the data or better word is to transform the incoming data to meet requirements and objectives. This is called Transformation. Once every slicing and dicing of the data is done along with applied business rules, this data is ready for loading into the target tables. This process is called Loading. So overall till now we have done Extraction, Transformation and Loading. In short we call this ETL. There are lot of tools available in today's market which does help in achieving the ETL process. Once this data is loaded in to the database, this is ready for next processing. We call that database as Data warehouse database. The next process could be building of datamarts or directly reporting from it. There are lot of tools/software available for reporting/analysis. Some call it business reporting or analysis tool. But if you see the whole process has intelligence involved in business. we can call this or the gurus call it Data warehousing and the system involved from end to end is called business intelligence system.

CHAPTER 7 -> Storing Organizational Information (Database)

1. FUNDAMENTAL CONCEPTS OF THE RELATIONAL DATABASE MODEL

A relational database is a core, a system for storing and using data based upon the relationships among the elements of data. 

Different as databases may be in size, they are generally always structured according to one of three database models:

Relational = Nowadays, new installations of database management systems are almost exclusively of the relational type. Organizations that

already have a major investment in hierarchical or network technology

may add to the existing model, but groups that have no need to maintain

compatibility with “legacy systems” nearly always choose the relational

model for their databases.

Hierarchical = Hierarchical databases are aptly named because they have

a simple hierarchical structure that allows fast data access. They suffer

from redundancy problems and a structural inflexibility that makes database modification difficult.

Network = Network databases have minimal redundancy but pay for that

advantage with structural complexity.

A cube is one way to illustrate relations among data as it helps to visualize data intersections. While it is easiest for us to picture a three-dimensional cube, a relational database stores data in many dimensions. 

We can think of dimensions as the entry points into the data or those business concepts we will use to slice and dice our data. In some organizations, dimensions are referred to as entities.

Many customers will buy many products in many stores at many times. We will call this type of data relationship a many-to-many relationship. In many-to-many relationships we use dimensional keys to organize the data. Look for the keys in the dimensional model at above.

-Each dimension has a single primary key. The primary key is unique to each row or record in our database and its value should not change over time.

-A primary key is often a consecutive or random number assigned to the record as it enters the database. 

-A primary key can also be made up of components of other fields in the table.

-The primary key is used for indexing the table to make it more efficient to search, sort, link and perform other operations on the data. 

-If we review the market dimension we find that each store key is unique. no two stores can have the same store key. Although it might seem that we could use store name as a unique means of identifying each store, we have  different stores with different addresses, states, regions, etc.

- When these keys appear in the fact table, they are referred to as foreign keys. In the Sales Fact Table, the foreign key is no longer unique. It may appear many times or not at all. 

- So the foreign keys in the fact table must have counterparts in the dimension tables to which it refers. This requirement of relational databases is called referential integrity.

- If you spend a great deal of time talking with data modelers you may come across a few more terms having to do with keys, such as composite keys and concatenated keys. Every fact table in a relational database has a composite key. 

- This is the primary key for the fact table and it is usually made up of a combination of the foreign keys maintained in the fact table. These foreign keys are concatenated (linked together into a single entry) into a primary key for the fact table.

2.THE ADVANTAGES OF RELATIONAL DATABASE

customer can click faster and the other page can appear as far as possible.

this is an example of website that people can surfing the internet. Google, Mozilla, Explore and etc.

company want to integrate its database because they will connect,communicate,dealing and having relation with its customer everyday. Everyday its customers will open the webpage and search anything appear on the page. Therefore, if the product still available or not available the supplier must inform the customers immediately.Publish the information on the web page to make the customers realize that the product exist or not in the market. Then, when the customers got information they will not too disappointed and not waiting too long. Customers satisfy, the business relationship between sellers and customers will be good.:) 

increased flexibility      

increased information security   

 increased information integrity

reduced information redundancy

 increased scalability and performance

3. DATABASE MANAGEMENT SYSTEM & RELATIONSHIP WITH WEBSITE

   - A Database Management System (DBMS) is a set of programs that enables you to store,modify, and extract information from a database.

- It also provides users with tools to add, delete, access, modify, and analyze data stored in one location.

-  A group can access the data by using query and reporting tools that are part of the DBMS or by using application programs specifically written to access the data. 

- DBMS also provide the method for maintaining the integrity of stored data, running security and users access, and recovering information if the system fails

- Many DBMS also include a graphics component that enables you to output information in the form of graphs and charts. Database and database management system are essential to all areas of business, they must be carefully managed.

Consider for example, a company selling sports cars. A database is created with information on each of its currently available cars e.g. make, model, engine details, year, a photograph, etc. A visitor to the website clicks on Porsche, the visitor enters the price range that they are interested in and hits 'Go'. The visitor is presented with information on available Porsche cars in their price range and an invitation to purchase or request more information from the company. The company has the ability to add new cars to the database, remove them or modify existing entries - this is achieved via a secure administration area on the website.

4. WHY ORGANIZATION WOULD WANT TO INTEGRATE ITS DATABASE?

Data integration refers to the organization’s inventory of data and information assets as well as the tools, strategies and philosophies by which fragmented data assets are aligned to support business goals.

CHAPTER6: VALUING ORGANIZATIONAL INFORMATION

Organizational information comes at different levels and in different formats and granularities. Information granularities refers to the extent of details within the information. The organizational must know what kind of information that they want for. Make sure the information gives the best quality or high quality for that organizational itself.

Employees must be able to differentiate the levels of the information, formats, and granularities of information when making a decision. If the employees can knows how to use the information with different levels of information or format then, the information can be a values to the sender or receiver of the information.

Successfully collecting, compiling, sorting, and finally analyzing information from multiple levels, in varied formats, exhibiting different granularity can provide tremendous insight how an organization is performing.

TRANSACTIONAL INFORMATION

• Encompasses all of the information contained within a single business processes or unit of work and its primary purpose is to support the performing of daily operational tasks.

• Any documentation about the information. Example: The receipt purchase by the customer.

• All the information will enter in the database and will correlate.

• The organizational need that information in database to make a decision.

ANALYTICAL INFORMATION

• Encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks.

• From the transactional information, the organizational can get the analytical information. For example, when comes to Ramadhan, the organizational looks the previous database Ramadhan to give more promotional to customer.

• Any kind of information must have timing information because we want to look whether the information still can use in the effective time or not.

All the information have a timing information. For example, Real-time information means immediate up-to-date information. And this kind of information are not always constant because it's always keep up-to-date.

Poor Information

Poor information happened when some of the information are not completed or missing and this make the information are not accurate, inability to track customers. With the poor information, its difficult for the organizational to make a right decision because of poor information happened.

High Information

High quality of information can significantly improve the chances of making a good decision and directly increase an organization's bottom line. But if the organizational have high quality information, that's not guarantee that can make a good decision because obviously people ultimately make decisions. So, if the organizational have a high quality of information but the people in the organizational do not use the information accurately, it will be nothing.

Organizational Structures That Support Strategic Initiatives

Organizational Structures
Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.
Ethics and security are two fundamental building blocks that organizations must base their businesses upon.

IT Roles and Responsibilities
Information technology is a relatively new functional area, having only been around formally for around 40 years.
Recent IT-related strategic positions:
Chief Information Officer (CIO)
Chief Technology Officer (CTO)
Chief Security Officer (CSO)
Chief Privacy Officer (CPO)
Chief Knowledge Office (CKO) 
Chief Information Officer (CIO) – oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives

Broad CIO functions include:
Manager – ensuring the delivery of all IT projects, on time and within budget
Leader – ensuring the strategic vision of IT is in line with the strategic vision of the organization
Communicator – building and maintaining strong executive relationships
Chief Technology Officer (CTO) – responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT
Chief Security Officer (CSO) – responsible for ensuring the security of IT systems
Chief Privacy Officer (CPO) – responsible for ensuring the ethical and legal use of information
Chief Knowledge Office (CKO) - responsible for collecting, maintaining, and distributing the organization’s knowledge.

The Gap Between Business Personnel and IT Personnel
-Business personnel possess expertise in functional areas such as marketing, accounting, and sales
-IT personnel have the technological expertise
-This typically causes a communications gap between the business personnel and IT personnel 

Improving Communications
-Business personnel must seek to increase their understanding of IT
-IT personnel must seek to increase their understanding of the business
-It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel

Organizational Fundamentals – 
Ethics and Security
Ethics and security are two fundamental building blocks that organizations must base their businesses on to be successful.
In recent years, such events as the Enron and Martha Stewart, along with 9/11 have shed new light on the meaning of ethics and security.

Ethics
Ethics – the principles and standards that guide our behavior toward other people
Privacy is a major ethical issue
Privacy – the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.
Issues affected by technology advances:
-Intellectual property
-Copyright
-Fair use doctrine
-Pirated software
-Counterfeit software
-One of the main ingredients in trust is privacy
-Primary reasons privacy issues lost trust for e-business

Security
Organizational information is intellectual capital - it must be protected
Information security – the protection of information from accidental or intentional misuse by persons inside or outside an organization
E-business automatically creates tremendous information security risks for organizations

Apple – Merging Technology, Business, and Entertainment
1.Predict what might have happened to Apple if its top executives had not supported investments in IT
2.Explain why it would be unethical for Apple to allow its customers to download free music from iTunes
3.Evaluate the effects on Apple’s business if it failed to secure its customer’s information and it was accidentally posted to an anonymous Web site
4.Explain why Apple should have a CIO, CTO, CPO, CSO, and CKO

Executive Dilemmas in the Information Age

The vast array of business initiatives from SCM to ERP make it clear the IT is a business strategy and is quickly becoming a survival issue.
This case explores several examples of executive IT issues resulting from IT.