Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P66 docx

584 &RQÀLFWV&RPSURPLVHVDQG3ROLWLFDO'HFLVLRQV ownership of information, and organizational responsibilities. )LJXUHVKRZVFRQFLVHO\RXU¿QGLQJV:KHQ creating e-business or enterprise architecture, the major problems to be solved are organizational. This does not align with the support that UML and RUP provides, because they mostly concen- trate on solving the problems in the language and technical contexts. It is the task of future research to provide improvements to this, but, as can be seen from Table 2, it might need quite radical extensions or changes to UML and RUP to be able to support effectively the formation of e-business architecture. CONCLUSION We have described a process where a large ICT company is building architecture for a comprehensive e-business system. From the case, we extracted 13 requirements for methodology supporting integrated e-business systems de- YHORSPHQW DQG FODVVL¿HG WKH UHTXLUHPHQWV WR technology, language, and organization contexts. We also compared the requirements to the support that UML and RUP offers and concluded that the HEXVLQHVVVSHFL¿FUHTXLUHPHQWVDUHQRWPHWLQ UML and RUP. Successful e-business development requires alternative approaches that support better organization change, communication between stakeholders, systems integration, objective formation, and evolutionary development. In our study, architecture manifested itself as a catalyst that makes business and organizational FRQÀLFWVDQGSUREOHPVFRQFUHWH:KHQPDNLQJ decisions about architecture, the systems architects had to take into account the organizational situation in the company. At the same time the architecture starts shaping and changing the organization, thus forming a double mangle (e.g., Jones, 1998). The architects also realized that technical rationality is not enough for success in this kind of a situation. To succeed in e-business architecture development, one has to be aware of the political and organizational forces that are driving the development and its objectives. E-business architecture development can therefore be characterized as a process of seeking boundaries, ¿QGLQJVXI¿FLHQWFRQVHQVXVDQGLGHQWLI\LQJFRP- monalities across organizational borders. Most previous literature on architectural methods has neglected this and sought to develop description languages for describing the actual architectures for systems with clear problem statements, whereas we claim that it would be more important to seek tools that aid in building common understanding about the system and its architecture DQGWRROVIRUSURFHVVLQJWKHHPHUJLQJFRQÀLFWV 7KXVZHPDLQWDLQWKDWWKH¿HOGRIDUFKLWHFWXUH IRUHEXVLQHVVZRXOGEHQH¿WIURPWRROVWKDWKHOS WR LGHQWLI\ DQG SURFHVV WKH HPHUJLQJ FRQÀLFWV than tools that aid in developing a technically ³SHUIHFW´DQGRSWLPL]HGVROXWLRQ7KHVHWRROV could be used in early phases of development to augment UML and RUP based tools. Examples of such tools are group support systems and different participation facilitation systems. Thus we do not call for replacing UML, but rather adding tools that can be used to communicate with non- technical people about the architecture. ACKNOWLEDGMENTS We would like to thank the anonymous reviewers of this paper for their valuable instructions and especially the reviewer that gave us the simple idea of Figure 3. REFERENCES August, J. H. (1991). Joint application design: The group session approach to system design. Englewood Cliffs, NJ: Yourdon Press. 585 &RQÀLFWV&RPSURPLVHVDQG3ROLWLFDO'HFLVLRQV Baskerville, R., & Pries-Heje, J. (2001, July 27-29). 5 D FL Q JWK H HE R P E +RZ WKH L QWH U Q H WL V U HGH ¿ Q L QJ  information systems development methodology. Proceedings of the IFIP TC8/WG8.2 Working Conference on Realigning Research and Practice in Information Systems Development: The So- cial and Organizational Perspectice (pp. 49-68). Boise, Idaho. Bichler, M., Segev, A., & Zhao, J. L. (1998). Component-based e-commerce: Assesment of current practices and future directions. SIGMOD Record, 27(4), 7-14. Checkland, P. B., & Scholes, J. (1990). Soft system methodology in action. 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This work was previously published in Selected Readings on Information Technology and Business Systems Management, edited by I. Lee, pp. 71-93, copyright 2009 by Information Science Reference (an imprint of IGI Global). 589 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 2.16 Developing a Global CRM Strategy Michael Shumanov Monash University, Australia Michael Ewing Monash University, Australia ABSTRACT While the managerial rationale for adopting customer relationship management (CRM) has been fairly well articulated in the literature, research on strategy development is scant. Moreover, reports RI³&50IDLOXUHV´LQWKHSRSXODUEXVLQHVVSUHVV K DY HG R QH O LW W OH W RL Q V SLUH F RQ ¿GH QFH 7R G DW H ZK DW little research has been conducted in the area of &50VWUDWHJ\GHYHORSPHQWKDVEHHQFRQ¿QHGWRD single country (often the U.S.). Global CRM strat- HJ\GHYHORSPHQWLVVXHVKDYH\HWWREHVSHFL¿FDOO\ addressed, particularly which elements of CRM strategy should be centralised/decentralised. The present study examines the complexities of global & 5 0 VW UDW HJ \X V L QJW K HFD V HR ID OHD G L Q J¿ QDQ F LD O  services company. Interviews are conducted in FRXQWULHV*OREDO+HDG2I¿FHDQGH[WHUQDO,7 consultant perspectives are also considered. Our ¿QGLQJVFRQ¿UPWKDWDK\EULGDSSURDFKKDVZLGH practical appeal and that subsidiary orientation towards centralisation/decentralisation is moder- DWHGE\¿UPPDUNHWVL]HDQGVRSKLVWLFDWLRQ INTRODUCTION Recent advances in information technology (IT) have enhanced the possibilities for collecting customer data and generating information to support marketing decision making. CRM has been heralded by some as being the key to deliv- ering superior business performance by focusing organisational efforts towards becoming more customer-centric and responsive (Davenport, Har- ris, & Kohli, 2001; Puschman & Rainer, 2001). However, others have cautioned that increasing information may actually increase the complexity of the decision-making process thereby adversely affecting decision-making performance (Van Bruggen, Smidts, & Wierenga, 2001). 590 Developing a Global CRM Strategy Much of the extant academic literature on CRM has focused on identifying antecedents and consequences (e.g., Bull, 2003; Day & Van den Bulte 2002; Kotorov, 2003; Ryals & Knox, 2001). CRM has been variously conceptualised as (1) a process (e.g., Day & Van den Bulte, 2002; Galbreath & Rogers, 1999; Srivastava, Shervani, & Fahey, 1998); (2) a strategy (e.g., Croteau & Li, 2003; Verhoef & Donkers, 2001); (3) a philosophy (e.g., Fairhurst, 2001; Reichheld, 1996); (4) a capability (e.g., Peppers, Rogers, & Dorf, 1999) and (5) a technology (e.g., Shoemaker, 2001). Although there is clearly more to CRM than technology (Day & Van den Bulte, 2002; Reinartz, Krafft, & Hoyer, 2004), it is important to recognise that technology does play a central role in supporting the seamless integration of multiple customer touch points. IT also enables organisations to collect, store, develop, and disseminate knowledge throughout the organisation (Bose 2002; Crosby & Johnson, 2001). Customer knowledge is critical for successful customer relationship management (Crosby & Johnson, 2000; Davenport et al., 2001; Hirschowitz, 2001). &50'H¿QHG The importance of technology in enabling CRM LV H[HPSOL¿HG E\ WKH DWWHPSWV DW GH¿QLQJ WKH FRQFHSW&50KDVEHHQGH¿QHGDVWKHDOLJQPHQW of business strategies and processes to create customer loyalty and ultimately corporate profitability enabled by technology (Rigby, Reichheld, & Schefter, 2002). In a similar vain, 5\DOVGH¿QHVLWDVWKHOLIHWLPHPDQDJHPHQW of customer relationships using IT. E-CRM is GH¿QHGDVWKHDSSOLFDWLRQRIFXVWRPHUUHODWLRQ- ship management processes utlising IT and relies on technology such as relational databases, data warehouses, data mining, computer telephony integration, Internet, and multi-channel communication platforms in order to get closer to customers (Chen & Chen, 2004; Fjermestad & Romano, 2003). In many respects e-CRM is a WDXWRORJ\LQWKDWZLWKRXW³H´RUWHFKQRORJ\WKHUH would be no CRM. We therefore standardise on the term CRM throughout the paper. As a business philosophy, CRM is inextricably linked to the marketing concept (Kotler, 1967) and PDUNHWRULHQWDWLRQZKLFKVWUHVVHVWKDW¿UPVPXVW organise around, and be responsive to, the needs of customers (Kohli & Jaworski, 1990; Narver & Slater, 1990). From a capability perspective, CRM needs to be able to gather intelligence about current and prospective customers (Campbell, 2003; Crosby & Johnson, 2000; Davenport et al., 2001; Zablah, Bellenger, & Johnston, 2004) and apply that intelligence to shape its subsequent customer interactions. Furthermore, CRM processes need to acknowledge that relationships develop over time, have distinct phases, and are dynamic (Dwyer, Schurr, & Oh, 1987). Adopting this view highlights that CRM processes are best thought of as longitudinal phenomena. The interesting feature IRU¿UPVLVWKDWWKH\VKRXOGLQWHUDFWDQGPDQDJH relationships with customers differently at each stage (Srivastava et al., 1998). Essentially, CRM involves the systematic and proactive management of relationships from initiation to termination across all channels (Reinartz et al., 2004). Another aspect of the relationship continuum is that not all relationships provide equivalent value to the ¿UP&50UHTXLUHV¿UPVWRDOORFDWHUHVRXUFHV to customer segments based on the value of the FXVWRPHUVHJPHQWWRWKH¿UP=DEODKHWDO Zeithaml, Rust, & Lemon, 2001). CRM Strategy A high degree of CRM process implementation LVFKDUDFWHULVHGDVZKHUH¿UPVDUHDEOHWRDGMXVW their customer interactions based on the life- cycle stages of their customers and their capacity WRLQÀXHQFHRUVKDSHWKHVWDJHVLHH[WHQGLQJ relationships, Reinartz et al., 2004). Standardis- ing CRM processes enables consistent execution to customers across all delivery channels. Suc- cessful CRM also requires organisational align- 591 Developing a Global CRM Strategy ment (employee reward systems, organisational structure, training procedures) and investments in CRM technology. Interestingly, the level of technological sophistication of CRM technology makes no contribution to economic performance and supports the view that CRM is more than just software (Reinartz et al., 2004). CRM can be conceptualised at three levels: (1) company wide, (2) functional, and (3) customer facing (Buttle, 2004). This study adopts the FRPSDQ\ZLGHGH¿QLWLRQRI&50ZKLFKYLHZV CRM as a core customer-centric business strategy IRFXVHG RQ DFTXLULQJ DQG UHWDLQLQJ SUR¿WDEOH customers (Buttle, 2004). This requires a customer-centric business culture, formal reward and recognition systems that promote employee behaviours that enhance customer satisfaction and the sharing of customer information and its conversion into useful knowledge. Unfortunately, CRM’s potential has, in many instances, failed to be realised. Successful implementation requires the adoption of a customer-centric business strategy and a redesign RIIXQFWLRQDODFWLYLWLHVZRUNÀRZVDQGSURFHVVHV (Galami, 2000; Nelson & Berg, 2000). Some organisations have begun focusing their business strategy around their customers and capturing, sharing, and applying customer knowledge to deliver superior service and customisation (Mitchell, 1998). However, despite the rhetoric, empirical research on CRM strategy development is scarce. In particular, work on the vexing standardisation/ localisation issue is lacking. In this increasingly globalised economy, it is surprising that researchers have overlooked cross-national differences and global CRM strategy issues. To address these gaps, the present study will seek to explore in depth the issues surrounding standardisation versus localisation of CRM strategy development. A case study of a leading ¿QDQFLDO VHUYLFHV FRPSDQ\ LV XVHG WR H[SORUH these issues. The paper reviews the localisation/ centralisation literature, describes the study to EHXQGHUWDNHQDQGEDVHGRQWKH¿QGLQJVGUDZV a number of conclusions regarding global CRM strategy development and highlights areas worthy of future research. GLOBAL CRM STRATEGY In an increasingly competitive and complex market environment, multi-national enterprises (MNE’s) are under constant pressure to re-assess the degree of autonomy they grant to their local subsidiaries. While headquarters are likely to have more expertise on strategic matters, local subsidiaries are likely to have more information on operational issues and be more responsive to G\QDPLFVLPSDFWLQJWKHLUVSHFL¿FPDUNHW:LWKLQ DVSHFL¿F01(FRQWH[WFHQWUDOLVDWLRQUHIHUVWR where decision making is vested largely with the global parent company (Cray, 1984). By contrast, GHFHQWUDOLVHGRUJDQLVDWLRQVDUHGH¿QHGDVWKRVH where each subsidiary has a high degree of autonomy in making decisions on processes and products relevant to the needs of the local market (Edwards, Ahmad, & Moss, 2002). There is some empirical evidence to suggest that although subsidiaries of global parent organisations may be given some autonomy in making operating decisions, strategic decision making is invariably controlled by the parent organisation (Bowman, Farley, & Schmittlein, 2000), which can be manifested through IT (Roche, 1996). 0RUHRYHU,7SURYLGHVDQHI¿FLHQWDQGHIIHFWLYH decision support system to transfer information from the local subsidiary into the parent company’s reporting models, increasing the capacity of headquarter management to engage in local company decision making (Clemmons & Simon, 2001; McDonald, 1996). Using a case study approach, Ciborra and Failla (2000) found that IBM failed in its vision for global CRM because of their ¿[DWLRQIRUVWDQGDUGLVDWLRQDQGFHQWUDOLVDWLRQDQG the use of IT to enforce behaviours. Furthermore, they concluded that this variation in CRM adop- 592 Developing a Global CRM Strategy tion at the country level and unique regulatory UHTXLUHPHQWVPDGHWKHFRQFHSWRI³JOREDO&50´ tenuous at best, although they acknowledge that &50LVD³SRZHUIXOZHDSRQIRUFHQWUDOLVDWLRQ´ (Ciborra & Failla, 2000, p. 122). This desire for greater parent company control is a function of perceived risk. That is, the greater the perceived level of risk, the greater the desire for active decision making (Garnier, 1982). The types of decisions likely to require parent company decision making include capital expenditure; acquisitions and divestments; and funding. A criticism of centralised decision making is that it is expensive and that local subsidiaries are unable to react quickly to changes in local market dynamics (Harris, 1992). There is some empirical evidence to suggest that organisations with decentralised decision making performed better than those organisations characterised as having centralised decision making with respect to marketing (Ozsomer & Prussia, 2000). More- over, highly centralised organisations make less contribution to their host country in terms of investment, knowledge transfer, and management expertise than their decentralised counterparts (Fina & Rugman, 1996). We have adopted a typology developed by Barlett and Ghoshal (1989) to classify the predis- position of organisations for a globalised/localised orientation. They describe organisations as: global, international, multi-national, and transnational. A global organisation is characterised as driven E\WKHQHHGIRUJOREDOHI¿FLHQF\ZKLOHKDYLQJ structures that are more centralised in their strategic and operational decisions. An international organisation is characterised as transferring and adapting the parent company’s knowledge or expertise to foreign subsidiaries. The parent retains LQÀXHQFHDQGFRQWUROEXWWRDOHVVHUH[WHQWWKDQD classic global structure. A multi-national organisation manages its subsidiaries as though they were components of a portfolio of multi-national entities with headquarters exercising low control and low coordination. Finally, a transnational organisation seeks a balance between global integration and local responsiveness. This type of organisation has structures considered to be both centralised and decentralised simultaneously. Transnational ¿UPVKDYHKLJKHUGHJUHHVRIFRRUGLQDWLRQZLWK low control dispersed throughout the organisa- WLRQ8VLQJWKLVW\SRORJ\RXUIRFDO¿UPFDQEH characterised as a global organisation. That is, they employ structures that are more centralised in their strategic and operational decisions, and their products are homogenous throughout the world. Given a centralised structure, most of the decisions are made at headquarter level and imposed on subsidiaries. Agency Theory We use agency theory (Ross, 1973) as the theoretical foundation for describing the relationship between headquarters and country subsidiaries. Agency theory refers to the basic agency structure of a principal and agent who are engaged in cooperative behaviour, but having differing goals and attitudes to risk (Ross, 1973). In our research, the principal is headquarters and the agent is the subsidiary organisation. Goal differences, risk tolerance differences, and information asym- metry can create problems in agency relations (LVHQKDUGW7KH¿UVWJHQHUDOSUREOHPLV differences in the goals of principal and agents. Agents may act in their own self-interest at the expense of the principal. Secondly, principals and agents may have different tolerances towards risk. In the context of CRM strategy development, the principal is likely to have a lower risk tolerance than the agent. The third problem, asymmetric information arises when one party has more information than the other, or when one party prefers to keep some information private. There are two types of agent behaviour that FRXOGEHGHWULPHQWDOWRWKHSULQFLSDO7KH¿UVW adverse selection might refer to a subsidiary’s misrepresentation of its ability to undertake/imple- ment CRM. The second moral hazard refers to 593 Developing a Global CRM Strategy the fact that the agent may not act as diligently as anticipated in carrying out the will of the principal. However, agency theory proposes that better information management systems can reduce the agency problem and provide the principal with greater control and is consistent with our earlier discussion on global CRM strategy development. Control may take the form of behaviour-based or outcome-based strategies. Both rely on the principal’s ability to evaluate the performance of the agent, either on a behaviour-by-behaviour basis or at the end of the project based on its outcome (Eisenhardt, 1985). From the principal’s perspective, adopting an outcome-based control strategy is likely to be GLI¿FXOWJLYHQWKDWWKHSULQFLSDOZRXOGQHHGWR wait until the long-term outcomes became known. Consequently, a behaviour-based control strategy may be preferred by the principal in CRM strategy development. The degree of knowledge that the principal (headquarters) has about the agent (wholly owned subsidiary) in terms of market FKDUDFWHULVWLFVFXVWRPHUSUR¿OHDQGSURFHVVHV enables headquarters to more effectively moni- tor and control a subsidiary’s behaviour (Kirsch, 1996). This is likely to mitigate the risk of subsidiaries acting in their own self-interest at the expense of the entire organisation. Agency theory (Ross, 1973) is therefore useful in addressing our research questions: what aspects of CRM strategy should be centralised/localised? and what are some of the complexities of cross-national CRM strategy development? Another fundamental concept is the level of involvement between the principal and agent in implementation. For instance, if the agent is able to customise the CRM implementation WRUHÀHFWWKHLUFRXQWU\¶VUHTXLUHPHQWVWKHQWKH principal has less ability to control the behaviour of local country CRM managers compared to where the local subsidiary is required to imple- ment a standardised CRM solution. However, the control dichotomy needs to be balanced to avoid implementation failure particularly where headquarters does not have an in-depth understanding of local market conditions. Furthermore, where a standardised implementation is imposed, it is important to consider the level of knowledge and dynamic learning mechanisms that will need to be created in the local subsidiary to address system failures. We also examined the channel coordination literature (i.e., Frazier, 1999; Frazier & Rody, 1991; Hunt & Nevin. 1974), which describes the relationship between buyer and seller involving a distribution channel. However, given that this research seeks to examine the relationship between headquarters and its subsidiaries, agency theory offers a more robust theoretical foundation with respect to CRM strategy development. The channel coordination literature relates more to relationships characterised as involving a distribution channel, rather than describing the parent-subsidiary relationship. METHOD Data Collection Understanding both substantive and methodologi- cal context permits the reader to put the research into context and thus derive deeper meaning from WKH¿QGLQJV-RKQV'DWDZHUHGHULYHGXVLQJ the case study method and utilising a multi-sample longitudinal research design (Yin, 1994). Case studies enable the development of deep insights into respondent beliefs and assist in theory development (Beverland, 2001). Bonoma (1985), Hirschman (1986), and Deshpande (1983) have all advocated for greater application of qualitative research methods in marketing. In order to avoid cueing subjects into a desired response, respon- dents were asked fairly general questions on the topic in order to elicit themes (Strauss & Corbin, 6SHFL¿FDOO\WZR³JUDQGWRXU´TXHVWLRQV 0F&UDFNHQZHUHDVNHG7KH¿UVWUHODWHGWR issues surrounding local subsidiary decision-making empowerment in relation to CRM strategy. . language, and organization contexts. We also compared the requirements to the support that UML and RUP offers and concluded that the HEXVLQHVVVSHFL¿FUHTXLUHPHQWVDUHQRWPHWLQ UML and RUP current practices and future directions. SIGMOD Record, 27(4), 7-14. Checkland, P. B., & Scholes, J. (1990). Soft system methodology in action. Chichester: John Wiley and Sons. Ciborra,. Systems and the Double Mangle: Steering a Course Between the Scylla of Embedded Structure and the Charybdis of Strong Symmetry. IFIP WG8.2/8.6 Joint Work- ing Conference, Helsinki, Finland. Kalakota,

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