InformationWeek
Defining The Business Value Of Technology
September 27, 1999
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IT is moving beyond its traditional scope to help companies improve response to customer needs
By Jeff Sweat
The IT department is increasingly critical to businesses that want to focus on the customer. In an InformationWeek Research survey of 200 IT managers, seven of 10 said their departments play a critical role in understanding customer needs, responding faster to customer inquiries, and developing new opportunities. The role of IT will only grow: 88% of respondents said IT will be very important to those efforts two years from now.
To stay competitive, businesses are investing heavily in technology such as the Web, customer-relationship management, and application integration to give customers multiple points of access and to pull all customer information into centralized locations. The Internet tops the list in importance for businesses that try to reach customers: Respondents rated a corporate Web site or portal a 7.2 on a 1-to-10 scale, with 10 considered extremely important. CRM functions were next, with call centers and billing systems each earning a 6 rating.
Driving Force
That's the case with Oak Paper Products Co., a $50 million Los Angeles distributor of paper and cardboard products. The family-owned business, competing in a traditionally low-tech industry, had not significantly changed the way it dealt with customers for decades. The IT department focused on data processing and network administration.
That started to change when Oak Paper hired Dan Riggs as implementation manager to oversee installation of an enterprise resource planning system. His new bosses also asked him to develop a more aggressive approach to gain market share. With 10 years in sales management, it was a problem he understood.
Oak Paper employs Oracle's Sales and Marketing application module to pull all customer information into a centralized information repository. That information can be used by sales reps in the company's business units and for marketing efforts. "Now, this stuff isn't locked in somebody's head," Riggs says. With detailed customer-interaction records across business units, the company has a better idea of the types of products a customer may buy, and can tailor markets and sales efforts accordingly.
Not that conventional CRM is the only approach the company is taking. Oak Paper also uses Oracle's Web Customer and Internet commerce packages, which let its customers place orders, edit their user profiles, and check status online. In the old system, a salesperson manually entered an order, then called it in, a time-consuming process. The new system redefines the sales reps' jobs. When customers place orders directly, sales reps don't waste time taking basic orders; they can spend that time selling additional products to existing customers. "We're looking for a cultural shift in the way that salespeople do business for us," Riggs says.
Which makes it doubly important that the technology goes in with the backing of the salespeople. To better understand the needs of sales reps, IT staffers sit in on meetings with customers and suppliers. Likewise, business personnel and sales managers stay close to the technology selection process, helping pick Oracle applications.
Illustration by Dennis Harms
s traditional businesses become customer-driven enterprises, IT organizations find themselves in the middle of that transformation, providing the technological foundation--and often the cultural impetus--to make it happen.
But there are more subtle factors drawing IT into the fray. Competitors are moving in on the same customers--93% of IT managers interviewed said their rivals are at least somewhat committed to satisfying the needs of external customers. "It's clear that the companies that want to differentiate themselves on customer service need to know about their customers. IT is the way to find that stuff out in a short period of time," says Don Buskard, senior VP of the IT group for AXA Financial Inc., the New York insurance and financial-services company that changed its name from Equitable Co.
It should come as no surprise that the IT department is becoming a force in shaping a company's IT policy. Business units are necessary to understand customer needs, but the IT unit is increasingly called upon to meet those needs.
CRM makes it possible for businesses to automate antiquated sales and customer-service practices. Oak Paper sells 95% of its products through a direct-sales force; the sales representatives have kept track of their own contacts in whatever way worked best for them. But such a haphazard system could cause problems. "If a salesman leaves the company, a lot of the valuable information that he's acquired in terms of contacts leaves, too," Riggs says.
continued...page 2, 3
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Photo of Buskard by Nancy Pierce
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