1. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Customer Relationship Management Systems 70-451 Management Information Systems Robert Monroe September 6, 2009

2. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Quiz 1.True or false: the facility that houses IT infrastructure is known as a Data Center. 2.True or false: according to the textbook, two categories of CRM systems are operational and additional. 3.The book describes a formula called RFM for identifying an organizations most important customers. Write down what either R, F, or M stand for.

3. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems After Today's Class You Should Be Able To: Understand some of the key challenges to building an effective IT infrastructure Explain why a company would invest in a Customer Relationship Management (CRM) system, and the primary uses for such a system Explain the difference between Operational CRM and Analytic CRM Explain how CRM systems can be used to acquire customers, enhance the companys relationship with its customers, and retain its customers

4. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Architecting IT Infrastructure

5. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Putting It All Together: IT Infrastructure ComponentsIS Infrastructure Server SAN Firewall PC PDA Smart Card IT Devices Chips RAM Disks PCBs Output Devices Input Devices … Operating System Chips RAM Disks PCBs Output Devices Input Devices Server Operating System Network Mgmt Sys

6. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Putting It All Together: Systems Architecting Successful information system deployment and adoption requires an IT infrastructure that is: –Reliable (highly available) –Robust –Manageable –Cost effective Achieving these goals requires careful planning, management, and investment This is the responsibility and role of a Systems Architect

7. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Systems Architecting: Building Blocks Client machines –PCs –PDAs –Cell phones –Etc… Servers –File Servers –Web Servers –Mail Servers –Etc… Software –Operating systems –Web, application, e-mail servers –Network management systems Networking equipment –Firewalls –Routers –Gateways –Load Balancers Storage systems –File servers –RAID arrays –Storage Area Networks (SANs) –Network Attached Storage (NAS) Uninteruptable power supplies Heating, Ventilation, Cooling (HVAC)

8. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Example: System Architecture Diagram

9. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems The Data Center A data center provides the technical physical infrastructure to run your web business

10. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems The Data Center

11. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Data Centers Provide Core physical infrastructure –Power –HVAC –Fire prevention and suppression –Seismic monitoring and bracing –Physical security Hardware, networking, software infrastructure –Rack space –Networking infrastructure (big pipes, lots of em) –Servers –Storage –Backup Management services (optional) –NOC

12. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Managing IT Infrastructure: TCO Total Cost of Ownership is more important than purchase price. The cost to power, support, and update hardware devices over their useful lifetime often exceeds initial purchase price. Some challenges in building a hardware infrastructure include: –Understanding where your true costs of ownership lie –Identifying what is essential and what is not –Training and managing qualified personnel –Maintenance of machines and network –Software licensing –Software and hardware obsolescence and upgrade cycles –Maintaining inventory (spares) –Power and HVAC

13. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems TCO Exercise: Write down five recurring expenses that an organization incurs in running a large information system in a data center.

14. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Backup and Disaster Recovery Provided by data centers, specialists, or in-house Put together a plan for disaster scenarios –Evaluate cost of downtime –Devise plans to handle disasters –Plan DR strategy based on cost/benefit analysis Disaster Recovery Services –Data backup and storage (hot-site, cold-site) –Data recovery and restoration –Business process fallback plans

15. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Backup and Disaster Recovery How do you know how much to spend for backup? For disaster recovery? How do you decide how often to back up your organizations data?

16. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Network Operations Center (NOC) A NOC provides: System monitoring Tech support calls On-site technicians Network security Platform admin Application admin

17. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems User Support Center (Help Desk) Everything to this point has focused on keeping the system running smoothly What about handling user problems? There are analogous processes and procedures for dealing with users –User support center (phones, e-mail, IM) –Troubleshooting guides –Processes for common requests –Escalation procedures –etc.

18. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Strategic Question: Outsource Your Data Center? Host Yourself: Better control Easier to update system quickly (Warning! Danger!) More expensive to do well than 3rd party hosting Much harder to build a robust data center yourself than to rent facility and expertise. 3rd Party hosting Quickly get a highly robust infrastructure No need to develop data center staff expertise Generally cheaper and easier overall than building yourself Loss of control –This can be both a blessing and a curse

19. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Customer Relationship Management

20. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Lets Talk Customers… Why does a business care about its customers? What makes a good customer for a business? Why might customers want to spend their money at a specific business? What are some things that businesses want their customers to do?

21. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems CRM Systems Consolidate Interaction Points CRM Systems: –Provide customer-facing employees with a single, complete view of every customer at every touch point and across all channels –Provide the customer with a single, complete view of the company and its extended channels Company CRM Customers

22. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems CRM Systems Consolidate Applications Integrate and automate many customer serving processes Create an IT framework of software and databases that integrates these processes with the rest of the companys business operations Includes software modules that provide tools that enable a business & its employees to provide fast, convenient, dependable, consistent service.

23. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems CRM Examples and Scenarios Your interactions with large companies are frequently managed by CRM systems Do you think these companies are using a CRM system? –Im sorry Mr. Monroe but I dont have that information. Ill have to transfer you to another office… –Im sorry Mr. Monroe, the representative you spoke with previously isnt available to help you now. Could you please explain the problem to me again from the beginning… –Thank you for flying Qatar Airways Mr. Monroe. I see that you prefer to have a window seat and are a gold privilege club member. Could I interest you in an upgrade to business class on this flight? We are offering a Ramadan promotion for our loyal customers with business class upgrades on sale at 30% off their regular price

24. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems CRM Benefits Enables a company to provide a consistent customer service experience Allows a business to identify its best customers Supports customer data mining and analytics Makes possible real-time customization & personalization of products & services based on: –customer wants and needs –buying habits –life cycles and lifestyles

25. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Major CRM Modules Source: OBrien-Marakas, Management Information Systems, 7 th ed.

26. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Major CRM System Modules Contact & Account Management –Helps capture and track relevant data about past and planned contacts with prospects & customers Sales –Provides sales reps with software tools & company data needed to support & manage their sales activities. –Helps optimize cross-selling & up-selling Retention and Loyalty Programs –Identify, reward, and market to loyal and profitable customers

27. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Major CRM System Modules (continued) Customer Service and Support –Software tools and real-time access to the common customer database –Create, assign, & manage requests for service from customers Call center software Help desk software Marketing & Fulfillment –Helps direct marketing campaigns by automating tasks –Helps capture & manage prospect & customer response data –Helps in fulfillment by quickly scheduling sales contacts & providing appropriate information on products & services to them

28. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Three Phases of Customer Lifecycle With CRM CRM systems provides value at three customer lifecycle stages: Shared Customer Database Source: OBrien-Marakas, Management Information Systems, 7 th ed

29. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Building CRM Capabilities Incrementally Operational CRM –Baseline capability –Track and manage customer interactions Analytical CRM –Analyze customer behavior and demands to better meet needs Collaborative CRM –Integrate CRM efforts with customers, suppliers, partners Portal-Based CRM –Move customer interactions to the web Portal- Based CRM Collab. CRM Operational CRM Analytical CRM

30. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Operational vs. Analytic CRM What types of operational and analytic functionality might the following modules provide? –Contact and account management –Sales –Retention and loyalty programs –Customer service and support –Marketing and fulfillment

31. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Customer Experience Example: Amazon.com After a few purchases at Amazon, when logging into my account, my previous history patterns of purchases were established and amazon began to suggest the purchase of items I may like in the price bracket I usually spent. This information is collected into their databases to give customers a sense of care from Amazon itself.

32. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Customer Experience Example: Al Mannai GMC Before the end of last semester, my father bought a GMC car. In Qatar, Al Mannai are the GMC car dealers. My father wanted to trade in a Cadillac he bought from them and replace it with the new GMC for a high price. They did not agree in the beginning. However, after they checked the records, they have found that my father has purchased eight cars from them in the last ten years, uses car services from Al Mannai only, and participates in their surveys. So, they couldn't refuse and lose a very good customer. They changed their minds and accepted the offer as they know that my father is a long-term customer and the money he pays on car service every year is pretty high, since he bought many cars from Al Mannai. This will generate a higher revenue even though they spent money on the used car, which will be sold later.

33. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Customer Experience Example: Dune Shoes A few weeks ago, Dune, a shoe shop that I shop at frequently sent me a text message to inform me that they have a new collection. Whenever I recieve this message from them I go and 90% of the time I buy a pair of shoes. So, I went to the shop and I picked out a pair but my size was not available. They instantly told me that they will bring in a pair my size soon and contact me. A few days ago, they called me and they said we just recieved that shoe that you were looking to buy in your size, would you like us to keep it on hold for you?" … I felt that their phone call increased my loyalty to them. They made me feel appreciated as a frequent customer and I consequently bought the shoes. Without their care about me as a customer, I would've probably gone to any other place.

34. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems Why Is Implementing CRM So Hard? They are big, complex undertakings Changing both business processes and info systems CRM implementations involve integrating many: –Business functions –Legacy information systems –People –Processes Failure to fully grasp scope of the project –Which leads to lack of understanding and preparation CRM is not a silver bullet!

35. Carnegie Mellon University ©2006 - 2009 Robert T. Monroe 70-451 Management Information Systems CRM Summary Used effectively, a CRM system can provide tremendous benefits to a company throughout the full customer lifecycle Unfortunately, it is very difficult to: –Implement a broad enterprise-grade CRM system effectively –Use it effectively once it is implemented and deployed –Avoid harming your relationships with your customers through careless application of the system Do the benefits outweigh the costs and risks?