InformationWeek

The basic thrust of customer-relationship management has been on automating service delivery and marketing and sales-force processes. The current thinking on CRM applications tends to focus on the following questions:

• How can we automate sales-force processes to reduce information asymmetry and delays, and improve efficiency?

• How can we automate call centers and integrate customer databases to reduce the total cost of ownership of call centers by head-count reduction?

• How can we automate E-mail interaction with customers to improve customer service and service efficiency, and integrate E-mail, telephone, and Web interfaces?

• How can we automate customer responses and profiles, track marketing campaigns through various media across a number of channels, and manage quote and proposal processes from negotiations to closing?

• How can we use our database information and suppliers' pipeline processes to forecast demand more accurately and create viable scheduling applications?

• How can we reduce overall production costs by streamlining the flow of goods through production processes and by improving information flow?

• How can we improve lead time, increase quality, and enable more customization at a lower cost?

There are actually several challenges in creating a consumer-centric information infrastructure. It must go beyond simply Web-enabling applications to create a direct interface with customers. Consider Internet banking, where the goal is to provide the consumer with an interface entailing banking applications. However, these applications now directly confront the heterogeneity in consumer competence. Internet banking may appear technically as simple as turning the teller's screen in a branch 180 degrees and presenting the application to consumers over the Web. It's much more than that. Fundamentally, the teller's interface is in the "bank's language" of products, services, and procedures. The teller is trained to mediate the transaction with consumers. In the case of Internet banking, not all consumers will be as savvy as the trained teller at interpreting the bank's language. Most consumers will expect an interface in the consumer's language. The goal then is not merely to transfer internal enterprise-based applications that are in the company's language to consumers to save costs; instead, it's to change the nature of consumer interaction with the company. Interface systems between the consumer and the company will have to be transparent to the consumer--not the other way around.

Consumers will demand choices in the number and configuration of services, as well as in how they are delivered. A company's infrastructure is required to let the dialogue evolve with the sophistication of the consumers. The infrastructure for a consumer-centric world needs to be geared to accept the centrality of the consumer and encourage active participation in all aspects of the experience, from information search and configuration of products and services to fulfillment and consumption. Facilitating rich dialogue will be the key to creating personalized experiences. Companies must recognize that such dialogues will increasingly reach beyond a consumer and the company to embrace communities of consumers.

Some companies recognize the importance of creating a personalized experience. Sumerset Houseboats engages consumers interactively by allowing them to design the boats they want, negotiate pricing, connect with the factory to participate in the boats' construction and communicate changes along the way, and provide real-time monitoring of the boats' progress. Similarly, FedEx provides information access from the time an order is placed to postdelivery support; it gives select customers the flexibility to dynamically change the route of deliveries, if necessary. Personalization is more than adding "my" to a "company.com"--it's giving consumers the ability to actively and dynamically reconfigure the products and services they consume.

The applications in the new information infrastructure need to be flexible to facilitate interactive dialogue initiated by consumers through devices such as PCs, personal digital assistants, telephones, and other appliances. A portfolio view of the applications in the information infrastructure helps gauge the risks and level of innovation needed to facilitate such changes and create new experiences for consumers.

While a commitment to CRM and supply-chain solutions will let companies deploy customer-centric applications quickly, such solutions may restrict the freedom to change, experiment, and innovate. As we build such an infrastructure for the new consumer-centric economy, the debate must shift to the following questions:

• How should we design an information infrastructure that takes a consumer-centric (consumer-to-business-to-business) fulfillment perspective?

• What are the implications of a capacity-for-innovation view of quality?

• How do we develop approaches to embrace fuzzy queries in the consumer's language?

• Given the heterogeneity of consumers, how do we develop appropriate patterns of speedy response that recognize consumer competence?

• How can we build a platform for ongoing, active, multiple-party dialogue between the company and its communities of consumers?

• How can we keep consumers excited, participative, and actively engaged?

• How do we prepare for competent consumers who will increasingly recognize and leverage their lifetime value to the company?

• How do we ensure that the consumer-centric information infrastructure can evolve? How do we design an information infrastructure that can accommodate future modifications and extensions based not only on a company's changing capabilities, but also on evolving consumer needs?

• As companies build a consumer-centric information infrastructure, will IT become the lag factor?

C.K. Prahalad is the Harvey C. Fruehauf Professor of Business Administration at the University of Michigan Business School in Ann Arbor, Mich. He is also the founder and chairman of Praja, a pioneer in interactive event experiences. Venkatram Ramaswamy is an associate professor of marketing at the University of Michigan Business School, and M.S. Krishnan is an assistant professor of computer and information systems.

Explore the implications of a customer-centric economy in this week's roundtable discussion, "The Competency Base."