InformationWeek
Defining The Business Value Of Technology
September 27, 1999
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Customer At The Core
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By Bob Violino
he key metric for many of the companies that made the 1999 InformationWeek 500 list is their strategy for improving relationships with customers. These companies are finding ways to apply IT to a standard business objective: keeping customers satisfied and loyal so they'll keep coming back.
Companies are luring new customers and holding onto existing ones through a variety of IT endeavors, including E-business ventures and other Internet initiatives that provide more purchasing and customer services options, data warehouses and knowledge-management projects that form the historical base from which to draw and analyze information on customer preferences and activities, and customer-relationship management systems that provide analysis about what customers want and need.
Indeed, a common attribute of many InformationWeek 500 companies is that their senior management consistently gives the green light to IT projects that are likely to improve business relations with customers. Even if it might mean little or no return on investment in the short term, companies are banking more than ever on customer-centric technologies as a way to find new customers and keep new and established ones returning.
For many organizations, business transformation is fueled by E-business. Companies in every industry within the InformationWeek 500 are engaged in some sort of E-business venture. Online sales are on the rise, and there's a growing reliance on electronic supply chains. Companies are selling everything from clothing to steel to food to insurance on the Internet, and providing online financial services, banking, consulting, and hotel and airline reservations.
E-volution Continues
Just how important has E-business become to technology managers? When IT executives at 250 of the InformationWeek 500 companies were asked to name their top business, technology, and organizational priorities for the coming year, E-business grabbed the No. 1 spot in all three categories. CIOs understand-or are beginning to understand-that their companies can't afford to ignore emergent E-business opportunities.
The key is the right avenue of distribution over the Internet. Companies are using their Web sites to distinguish and brand themselves, and they're opening up new growth opportunities by doing business with their partners online through electronic portals and extranets. No longer is E-business just providing simple information and services; it has become a tool to bolster customer relations.
According to the InformationWeek 500 qualifying survey conducted in May, nearly seven in 10 of surveyed companies use E-business or Web applications for supply-chain transactions with business partners or suppliers. Nearly the same number report that they're using electronic data interchange over an IP network and conducting business-to-business sales that don't involve traditional EDI. Nearly 60% of the companies have created enterprise portals (intranets with data gateways), 45% are using Web tools for custom product configuration, and more than one-third are handling credit-card transactions with customers over the Internet.
Ford Motor Co. in Detroit, for example, is offering a service called "The Connection" on the Ford.com Web site. The program-with three segments, devoted to car buyers, owners, and dealers-is designed to strengthen lifelong relationships with car owners, says Kristin Odeh, Ford's director of marketing and sales systems. "We're trying to improve our relationships with customers by being more knowledgeable about them," Odeh says. "This lets us know who Ford owners are and what they want, and allows us to share information with them."
The buyer portion of the site serves as a guide to selecting a car, with information on specific models, competitive comparisons, dealer locations, and information about financing and insurance. Users can "construct" a vehicle, choosing the make, model, color, and options. The potential customer then sends the information to a dealer, which searches for a car that fits the description. "In the future, we'll take a customer's order and send it directly to the plant, then have the vehicle delivered to the dealer of their choice," Odeh says.
People who already own Fords can use The Connection site to join a community of owners that holds online discussions with company representatives, follow vehicle maintenance schedules, andaccess links to special offers for car rentals while repairs are being made. Another portion of the site lets dealers create electronic connections to owners, list inventories of new and used vehicles, and, in some cases, set up appointments for service.
Odeh says Ford is considering selling auto parts on the Web and is already selling consumer goods such as clothing. Data that Ford obtains from its Web site will be used as part of a customer-knowledge system, which will also include a large central database.
Power In Knowledge
Data warehouses and related tools that allow companies to gather and use an ever-growing body of knowledge about product use and marketplace trends have become essential in company efforts to improve customer relations. In the survey of 250 IT executives from InformationWeek 500 companies, more than eight in 10 said relational databases and data warehouses were among their strategic technology priorities for the coming year.
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