IT strategy: electronic retail – Are all customers caught in the net?

The big enterprise software houses are increasingly worried thattail is still far from being big business. Lotus Development’s Internet supremo Victor Aberdeen begs to differ. their customers’ last minute focus on fixing the millennium bug and Emu conversion will put large new projects on hold. So is it too cynical to associate that with the emergence of the latest in a long line of IT buzzwords, customer relationship management (CRM)?

Perhaps, but the traditional software houses need to radically rethink their strategies. On the plus side, companies have turned their back on client/server and other frameworks that distributed IT power round the enterprise, and are putting it all back on centralised enterprise servers – mainframes by any other name.

But just as this encouraging trend emerges, the companies are hit by the dual bug, by new competitors and by the rise of the Internet and phenomena such as freeware applications.

In this market, the best response to a threat is always a buzzword.

One that taps into the customers’ own aims and fears but is not easily pinned down, is best of all. Customer relationship management seems to fit nicely with the mid-1990s claim that companies need to be customer driven, that service is the new differentiator. It is something many of the software houses’ clients are struggling work out how to achieve, and now they are being promised a solution on a plate in the shape of a CRM project and package.

The question is, what does CRM actually deliver except another consultancy bill and another ERP module?

Like ERP, which at a simple level ties together some long established stalwarts such as accounting and manufacturing systems, CRM renames many areas of applications that have been in use for years – not always with stunning success.

Customer relationship management claims to help companies accumulate, store and analyse data on their customers in order to understand more about their buying habits and requirements, to personalise services and products, to provide better and more informed response to enquiries.

All very useful, but that was the claim made a few years ago of data warehousing and data mining – technologies that aimed to store customer data in huge silos so that it could be sliced and diced to gain a detailed picture of the client.

Some companies, notably retailers, have used this to good effect, but only a small handful, almost all in the US, have achieved the massive benefits originally promised. And disturbingly, many of those that claim successful projects are measuring them by budget, sales of certain product lines, efficiency – but rarely the reactions of customers themselves.

All this is not to say that CRM is of no use. The aims are good – suppliers’ service levels are improving but have a long way to go. But CRM is a trend that has its roots in the suppliers’ need to create a new revenue stream, and as such will not fit perfectly with the needs of the software buyers.

Data on customers is vital to creating and maintaining a good relationship between them and a supplier, but even more important is the culture of the organisation – good training of appropriately qualified staff, in-depth research into customers’ real requirements and opinions. This challenge will not be met by a software package. Consultancy will help but the software without the cultural shift will achieve next to nothing. The company will know a lot more about its clients but not how to use that data to make the clients happier.

By all means add a useful module to the enterprise software choices, offering database and data analysis facilities for customer data. But users are getting buzzword weariness, and the software houses should beware of dressing up functional packages with big acronyms and undeliverable promises of results that only the user itself can achieve.

Caroline Gabriel is a group editor in VNU’s IT portfolio


Previously known as “Decision Support”, Business Intelligence software tools, applications and hardware platforms will play a critical role in maintaining and promoting a company’s success in the future. Analyst predictions in the Business Intelligence software market range between $2bn by 2000 (Dataquest) and $12.2bn by 2001 (IDC). However, in an industry that is famous for meaningless acronyms and naming conventions, Business Intelligence looks as if it could become yet another casualty.

Knowledge Management was a term used to describe expert system tools in the ’80s. Tools like Prolog and Level 5 from Information Builders were commercially available tools that were typically used by academics in scientific or technical engineering projects. However, some analysts are now marketing Knowledge Management to describe what has previously been known as Business Intelligence. Surely this can only add fuel to the “confusion” fire when vendors like Brio Technology continue to promote Business Intelligence as a message and others are talking about Knowledge Management? One saving grace for the entire Business Intelligence market is that a recent search on the World Wide Web returned results on “Knowledge Management” but they referred to “Expert Systems”.

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