Discussing The Challenges Faced In Business
Most top management executive today are faced with challenge of creating better ways of doing business in doing this , the customers have becomes the direct focused .In fact ,most organisation today, opine that a company’s success depend effectively on managing relationship with customers . In achieving this companies have adopted distinct electronic business application that would generally suit its mission and objective, E-business O’Brien state is the use of the internet and other network application, to process data of customers and business partner within a new worked enterprise (O’Brien, 2005) .Customer relationship management application has becomes a key element within e-business system which most organisation have already adopted.
The Customer relationship management application has been developed by most software companies like oracle, Sales force ,SAP and Seibel .The focused of this paper though is greatly on CRM application called SAPCO developed by SAP and how a UK top home improvement companies ,B&Q has been able to use it to develop that relationship with customers .
1.1 AIM AND OBJECTIVES
The analysis is this paper will show amongst other thing, how this application has accounted in many ways for the success and grow of customers loyalty of B&Q over the years ,it will also look at the business challenge associated with the use of the system within B&Q and by extension, the use of similar Customer relationship management systems supports by SAP in other organisation and importantly too, analyzing the ethical issues associated with technology.
A lot of recent articles and text books played a significant role in this work .Internet sources too ,cannot be underestimated alongside comments ,by way of interview conducted with some with some B&Q staff who were there when the system was introduced and other who have been using the system for years now.
2.0 CRM TECHNOLOGY AND SAP
Customer relationship management technology can up in the mid twentieth century as a result of the most management executive identifying the need to improved relationship with customer and in that way improve business efficiency. The general maxim that ‘the customers are always right ‘ seemed to take a more descriptive place as companies were now committed on doing whatever it takes to deliver the promise made (Nguyen et al 2007) .This is where technology comes into pay to create this needs business value. This is also where to business executive brainstorming on aborting the best application that would enhance better control over their operation. Customer relationship management application help organisation assess customer’s loyalty and profitability on measures such as repeat purchase, dollars spent and longevity (Popovice et al 2003)
It is important to note that Customer relationship management is like other E-commerce application, a combination of people, process and technology that seek to understand a company’s customers “. (Chen et al 2003) SAP happens to be one of the leading vendors for enterprise resource planning system, ERP. ERP systems are software package that permit companies to have more actual control over their operation. A typical CRM application will encompass the entire element in the diagram in figure 1 below
Sale Market and fulfillment
Service and support
Contact and Account
Prospect or customer
The diagram in figure 1 above show clearly that indeed ,the customer is the focus and all other aspect revolved around it ,aimed at marking the customer happy and by extension the business gaining repeat visit through customer loyalty .
Now, in this SAP’ major strength in this application, includes the extensive capability of the software’s functional these and many other reason may have formed that reason why a large organisation like B&Q picked sap to provide application .
2.1 LITERATURE REVIEW
2.1.1 NEED FOR CRM
As the power of the seller shifts to the buyer (Watson, 2002) organizations are realizing that competing with cheaper, better or different products is not sufficient, and competitive advantage cannot be achieved by purely differentiating products alone, but through enhanced customer relationships .At the same time, customers are experiencing low switching costs and could easily redirect their loyalty from one company to another (Holcom, 2001). Their expectations have also risen in recent years, making Customer relationship management a necessity in today’s customer-driven business environment (S.L. Pan, J.N. Lee, 2003).
Previous research has shown that it costs more to attract new customers than retain customers because of advertising and marketing costs .This means that, instead of differentiating products, organizations should differentiate customers (M. Nykamp, 2001) and they should shift their emphasis on market share to customer share (M. Rogers, 1993).
Research has also indicated that organizations must not only retain their customers but also expand the useful lifespan of customers with the organization ( Zeithaml, 2002 ) by means of IT. Through such technologies, one-to-one relationships (D. Peppers and M. Roger, 1993).Value creation (Barnes, 2001) customer value analysis, product and website customization are possible on a scale that was not possible in the past (M. Nykamp, 2001). According to the 80/20 rule, 20% of customers provide organizations with 80% of sales (Ryals and Knox, 2001). This further emphasizes the need for organizations to retain and engage in long-term relationships with profitable customers to maximize profits (J. Galbreath, 1998).
SAP IN B&Q.
SAPCO is an acronym in B&Q that stands from SAP Custer ordering system .it is a system being used by B&Q to process customers’ orders, monitor customer transaction and enhance better customer relationship. B&Q China, part of Kingfisher Group plc, is one of the top three global decorations and building materials groups. The group employs the equivalent of more than 10,000 full-time staff, serving a marketplace worth around $40 billion. Just like all customer relationship system, SAPCO enable B&Q to answer question around: what product or service are customer? How should we communicate with our customers? What are my customers ‘favourite colours or what is my customer’s size? (Popovvich, 2003). With SAPCO these question would be answered within minutes from customers’ transaction histories and processes.
Businesses and individuals working on refurbishment projects are prime sales opportunities for the Decoration Centers service at B&Q China. However, the workflow designed to track these opportunities relied on paper-based notes of project requirements, status, sales and value, and staff kept diaries to make follow-up calls. Total contract sales data was collected and collated manually, a process that took months, before central departments could analyze the results of marketing campaigns (http://www-01.ibm.com). Before B&Q introduced SAPCO, orders where made via paper and ink .And when I interviewed B&Q staff they confirmed that it was and herculean task. Mistake and long queues were that order of the day the employees found it very difficult with the stress associated with manual way of taking order from customers. The introduction of SAPCO has made all this problem history, customer can now go any of B &Q store through to the UK and have their orders complete within a few minutes.
3.1 THE SAPCO PROCESS
A potential customer who wants to buy goods from any B&Q stores across the UK come in to the shop and meet with a customer adviser who will help the customer to look for what hi want and help the customer to process the order in the system .before the can be done the customer must have a user name and password unique to the individual alone this what the employer will us in logging into the SAPCO application .in the case of the first time customer the customer adviser with request the customer to provide some personal details like name in full, house address, postcode, phone number these information will be keyed into the system after that ,the item number or the barcode number is keyed into the system and an order places . SAPCO will run through the system and identify where the item is, if it is in stock or needs to be ordered from outside the store and if so this process begins immediately. At this point again, the customer is asked about the quantity of goods to be ordered which is entered into the system. A quotation is also prepared by SAPCO if required by customer.
Once the order has been done successfully, the order is checked by both the B&Q staff and the customer to make sure the order is correct. The place of delivery of the item is then confirmed from the customer. The charges of delivery are automatically calculated by SAPCO. Then after the customer is issued a sales advice note which he takes to the checkout stand to make payment. If the item is not in store, SAPCO automatically orders the item and also states the date of delivery. This most times takes between four to six weeks (www.diy.com). It also uses the sales confirmation to control its finances effectively. This is done by client’s payment for items in B&Q can automatically and payments to supplies are included in the central cash flow furcating reports generated by the SAPCO financial application.
Again, if the customer had done business with B&Q before then and wants information about his earlier order or make a new one the staff need just ask for the postcode and customer number which would be used in locating the transaction history of the customer. Queries if any are spotted and sorted. Another angle to this system is once the order has been picked up, the B&Q staff must go back to the system, click on the item across the individual’s name. He then goes to the collection section and confirms after which he prints two copies of the collection note. A copy of the collection note is kept by B&Q and the other unsigned is given to the customer. This affirms to both B&Q and the customer that item has been picked and transaction completed.
One of the key benefits of SAPCO is that it links up all the departments in B&Q so a customer can walk to any sales advisor and ask about an order. The necessary information is taken off the customer at the nearest computer system available and the order is immediately displayed.
3.2 BENEFIT OF SAPCO AS A CRM TOOL
It has greatly improved the ordering system in B&Q. The ordering of products is done faster thereby enhancing business. It has also enabled B&Q to measure its customer’s loyalty better through the awareness of the history of customer transaction. It also manages customers’ documents better as it is fully integrated in the company’s business system. Prior to the use of SAPCO customer details were held on paper records, with key project milestones used as the triggers to remind customers to return to the stores. It was difficult to share information between different departments, such as keeping a record of product recommendations and noting project status, and potential opportunities are not always pursued. Angela Dong, Senior Project Manager, comments, “A customer usually spends some time consulting with B&Q staff, and may visit other shops to compare prices or consider alternatives. With customer information held on paper, it was all too easy to miss the follow-up sales opportunity to invite them to select B&Q.
Through this system and via the internet, customers have 24 hours access to their account. This enables them easily assess their account anytime. This has also helped reduced cost for the company. The usual logistics of making orders manually has been greatly reduced. Delivery of items and tracking of goods has improved greatly improved. This system works in a way that staffs handling delivery immediately see an order has been made and paid for; hence they are aware that there is another order waiting to be delivered. With all customer and project data captured electronically, B&Q is able to identify the right time to follow up with customers and maximize sales opportunities. B&Q central management is able to adjust marketing campaigns in response to actual sales made, respond to demand for specific products, and monitor payments and cash flow. The result is that B&Q is able to tailor its business more closely to the needs of customers, creating a genuine competitive advantage. It also a solution that that would serve customers better by providing detailed knowledge of stock levels and replenishment times, and, of course, accurate pricing, across all our stores. Customers are the most valuable assets of any company especially during this present economic situation and which SAPCO helps improves the volume of customers. According to Ian Anthony, Technical Infrastructure Programme Manager, B&Q the customer ordering system in particular we have seen a huge increase in the volume of customer orders going through since the systems been implemented. The data gathered from SAPCO helps B&Q to track projects status and ensure high quality which ultimately helps to improve customer satisfaction level. Due to the implementation of SAPCO information is completely transparent and managers are able to adjust sales and marketing strategies depending on actual data from current purchasing trends rather than having to wait for data to be complied by hand at the store level and later sent to the head office which normally take up to three months. (http://www-01.ibm.com). There is also an immediate visibility of the number of orders or contract which in other words means that SAPCO has improved both management and customer efficiency.
3.3 CHALLENGES OF SAPCO IN B&Q
The challenges of SAPCO differ from staff to staff. While some staffs believe is to be a total disaster others feel that there are ups and downs associated with its effective use. Some of which are listed below:
The speed of the internet which mainly depends on the network providing the connection as been identified as one of the major challenges. There are some times a completion of order could prove a difficult task as it could take up to ten minutes to move from one page to another. This customer is made in this instance to wait for an undue period of time. For the system to work efficiently a stable and secure internet network must be available.
Another big issue is the human side associated with it. Most have not come to properly appreciate the system so sometimes information is incorrectly entered. This is properly due to lack of enough training on the system or the staff’s personal decision not to imbibe proper procedure.
Data Collection And Processing – Management Perspective
Business management most times is centred on decision making. However, this aspect within most organisations is the central role of managers. Managers are faced daily with the challenges of coming up with processes that would enhance the effective running of the business. The use of information systems like the CRM technology has formed a critical role of this responsibility and to a large extend has improved this role.
Most of the decisions managers have to make now have become web based either through the internet or networking applications which foster the information processing. According to Loudon, managers can now “automate certain decision procedure (for example , determining the highest price that can be charged for a product to maintain market share or the highest amount of materials to maintain in inventory to maximise efficient customer response and product profitability)”. Loudon &Loudon 2002 pg. 404).
Organisations have a hierarchy of decision makers. This hierarchy in many ways enhances the smooth running of companies. Within the organisation there are the following:
Strategic Management – The manager here are concerned with decision around the long time value of the company and most times described as unstructured (George Steiner).
Tactical Management- Managers here are concerned with medium term planning. They “monitor the performance of the organisation, control budget, allocate resources and set budget (Bocij 2003 pg.18).
Operational Management- Manager here directly handles the running of the business. Decisions here are highly structured as they affect the business directly and are felt at the moment it is taken. Managers here implements budget and apply them to business.
For instance the decision by B&Q to adopt SAPCO as a customer relationship management tool for such a large organisation would have been exclusively strategic. However, setting out the budget and planning ahead for the system would have been tactical and implementation would have been by the operation managers.
Most CRM application has failed due to poor business management. However, B&Q’s SAPCO has been in use for more than seven years and it is still recording success on a daily basis. Managers can now ascertain the items that are in great need and hence proactively stock them.
SAPCO greatly supports operational and tactical decisions in B&Q. This SAP enabled system also “provides report, giving managers a comprehensive view of the firm’s performance. It also features corporate performance metrics, simulations and planning tools”. (Loudon & Loudon 2002 pg 423). Through this system, management can easily view their performance level and also the areas that need to be improved upon.
As an enterprise resource planning system, SAPCO brings all the units together into one entity and thereby having a better control of operation. This ultimately provides a better link with their supplier and distributors hence the main goal of servicing the customer is achieved. The integration of business systems has enabled management “reach beyond their own corporate walls to better connect with suppliers, distributors and end customers”. (Gupta 2000).
Sales are better managed especially with the use of the internet although this could also be a shortcoming since it means the system is dependent on the internet connection which it has no power over. However, the internet greatly supports the application. Managers at different levels can track sales at different locations and this gives them a better understanding of the business irrespective of how large the organisation maybe.
The rewards of an effective CRM technology like SAPCO are indeed enormous. Steve Gilman, BQI director and B&Q UK board director BQI has described the benefits of adopting SAP Retail as better customer availability and cost reductions. Gilman says, “We can record sales and margin accurately and as a result have boosted our margins. We have given ourselves a lead over our competitors.”(www.ciber.com.au/). Business chief executives can now stay ahead of the competition with greater focus on the customer than the competitors. On the management side cost are reduces and more revenue is made from increased sales.
Ethical Challenges In Customer Relationship Management
When a new technology is introduced into a business, it comes with its challenges. Its use even creates more challenges which in many ways affect its users. Ethics is one area of great concern to effective business management and information technology most effectively. Ethics “refers to the principles of right and wrong that individual, acting as free moral agents, can use to make choice to guide their behaviour”. (Laudon & Laudon 2002 pg 468)
Business ethics is crucial especially to management. It is something managers confront with everyday and have to deal with as the situation presents itself. O’Brien speaks of a situation in which he states that “as a business professional, you have a responsibility to promote ethical uses of information technology in the workplace”. (2005 pg.380). In today’s business world, issues of ethics range around privacy, intellectual property, security and even safety issues. Managers must make sure that its stakeholders interests are well protected when issues of this sort arise.
5.1 Information Systems And Ethics
5.1.1 Privacy- The issues of privacy have become one of growing concern as regards information systems in today’s business environment. Alter identifies two crucial areas in this: personal privacy, which talks about” the ability of an individual to avoid unwanted instructions into personal time. Space and property” (2002, pg.287), and the information privacy which deals with the “the ability of the individual to determined when, how and to what extent personal information is communicated to others” (2007, pg 287).
Privacy issues generally can be spotted in a lot of areas, today organisations, through use of the intranet within offices, can monitors mails that staff send across the organisation and also find out the sites they are visiting. This in a lot of ways infringes on their rights of privacy as individuals. That is why most individuals how prefer to send all private mails from their homes. However, the CRM technology is one area that this becomes very crucial. Companies in the process of conduction business with customers, gather a lot of personal information of its customers, for instance B&Q, with its SAPCO system. Most of customers’ personal details are taken by the system. It now dwells on managers and staffs alike to make sure that this information of customers are well protected from abuse.
However, over the years there had been codes like “the code of fair information practices” (Alter 2002, pg.290) created in the US to ensure that customers are to large extent in control of information released from being used for other things without their consent.
5.1.2 Health Issues- This is a very critical issue especially as information technology in the work place raises a variety of health issues. Heavy use of computer is reportedly causing health problems like job stress, damaged arm and neck muscles, eye strain radiation exposure and even death by computerised caused death”. O Brien 2005, pg 395). There are times when placing an order for customers on the system can take ages and these in cases are linked to a slow system of internet and how voluminous the order is. In tackling this issue, what B&Q has done is making sure that staffs have at least two breaks within a particular working day to ease of the stress that could be associated with this. A day off in the week is also given to staff. In this way, they probably foreseen the issues greatly minimised.
5.1.3 Property Issue- In information technology, this is often referred to as intellectual property which literally links to ownership of an idea or a product. This is very important in business. However, “the internet raises some new challenges” (Rowley 2002, pg. 244). Issues to be considered in terms of this include trade secrets, copyright and patents.
a. Trade secrets- These are very crucial corporate issues as most times. They are associated with company’s brand image and identity. They are often regarded as assets that if infringed upon can be sued in the court of law. In 2007, Oracle sued and accused SAP of hacking into its computer networks and stealing vital product information (BBC News 2007). Prevention this now, companies who own products must find ways of making sure that employees protect these from competitors and public generally.
b. Copyright- These refer to a law or statutory grant that protects creators of intellectual property from having their works copied by others for any purpose for a period of 28 years. Laudon & Laudon 2002, pg. 479). Despite the fact that companies like Oracle, Siebel, Sap, Salesforce all developed CRM. However, there are particular areas which are unique to this companies that cannot be taken from them. Also companies that use SAP products like B&Q (SAPCO) and Virgin cosmetics (MYSAP) all have customised products which are peculiar to their companies which must be protected.
6.0 Security Management In Information System
It is not enough to create systems within organisation, management must put certain measures in place to ensure that these information are well secured.Order Now