The Importance of Information Technology in Today’s World and Its Future Trends in CRM, ERP, and SCM

The word IT (Information Technology) has gained colossal popularity over the year and today, can almost be regarded as a basic necessity for most walks of life.  Whether it’s in the field of business, or medicine, engineering, customer relationship management or even architecture, information technology forms the back bone for us to stay in touch, connected and competitive in today’s fast moving world.

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If we look back at the inception of information technology, we can say that man has come a long way since then, and today we stand at a point where the role of information technology for us is analogous to a life saving drug.

Most of us are aware of major technological breakthroughs, therefore we are not going to waste our time going into historical details. The purpose of this article however, is aimed at focusing on the future trends in the field of information technology, how it will affect us, its role in Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and Supply Chain Management.

Information technology by far is the most dynamic fields, making new breakthroughs almost every second. It is therefore very important for us to keep ourselves updates with these breakthroughs in order to stay ahead and make our lives easier. In this dynamic world of information technology, if one is asked to focus of future trends in hard ware and software. (Long, 2005)

Keeping in view the recent launch of iPhone 3G, the slimmest note book by Apple, the trend towards slimmer mobile phones, one can say that the future of hardware can be described as a race against each other to achieve smaller gadgets with more memory, supporting more application. In terms of software, we have seen the new Windows Server 2008, and the new hype about the virtual revolution, which intends to dramatically revolutionize corporate computing.  In a nut shell it uses less servers, it’s cheaper, faster and makes things simpler. It also offers freedom to its customers, giving them the leeway to choose products of different companies for example a database or a data storage system using the products of two different organizations. (HARDWARE, 2005)

Also when talking about trends in information technology, one cannot literally isolate hard ware, software and CRM applications. What this really means is that CRM and ERP are implemented through software modules, It is just a like a group of softwares or modules, e.g. for customer management, we have CRM, where it’s all about being there with the customer through say mobile technologies, since the customer doesn’t have time to come visit you, you have to be available for them so the customer is able to pay bills through his mobile phone by a simple text message. This was one of the day to day example recent software trends. In a corporate world however, things are a little more complicated. (Long, 2005)

Customer Relationship Management

Customer Relationship Management as the name suggests is the business strategy of maintaining strong customer associations. Its aim is to keep the existing customers satisfied, loyal to the company and provide them with better quality and service everyday with the help of their feedback. The question that now arises is that in this entire process is that where does information technology fit in. Information technology provides CRM with frame work of communicating with customers, analyzing feedback and making strategic decisions. This requires data ware houses, intranets, Point of sale systems (hardware and software). In future Customer Relationship Management Systems are going to be more flexible, will be designed to quickly respond to changing customer requirements, there are CRM’s which act as a portal to other databases,  and are even available on blackberry phones. (Hedlund & Ingman, 2008)

In future there a more rapid movement will be seen to web based architecture and a wireless technology (e.g. mobile phones) from client server architecture which are real time information systems. Though a lot of organizations are yet to invest in CRM, according to estimates that “by 2009 50% of new investment in this area will be in SaaS or Software as a Service”. (CRM, 2007)

Enterprise Resource Planning (ERP)

Whether your business filed is manufacturing, sales or banking, Enterprise Resource Planning (ERP), single packaged software, is today a necessity for every business today. In simple words Enterprise Resource Management is a process of integrating different business processes in one single system which integrates hardware, multiple software modules and data ware houses. ERP can be defined as an umbrella which encompasses different software applications like Customer Relationship, Supply Chain Management and Accounting and Finance. With the implementation of an ERP system in an organization communication and execution of tasks among different departments (e.g. Accounting and Human Resources) becomes more efficient, less complicated and less time consuming.

Although ERP has changed the way corporations work, there are still identifiable gaps in this system. As compared to the past ERP applications are now more need based, less costly and more integrated with other functions, encouraging future IT trends in this area.  Open Source, Web enabled and wireless technologies are the three IT trends which describes future of ERP. (ERP, 2008)

Supply Chain Management.

“A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers”.(Ram Ganeshan)

Supply chain management is a very important aspect of conducting a business efficiently. It is not an easy task and the importance is such that it is treated as a separate entity or department altogether. The reason it is such an important function is that it affects customer satisfaction and business performance, hence takes your organization on a road of success.

Since supply chain management is so important a task to conduct business successfully, many steps are taken to make the whole process more efficient. This includes:

Integrative information technologies
Integrated supply chain networks
SUPPLY CHAIN INTEGRATION:

These include the linkages o the organization with suppliers and customers.

Valued and better relationship with clients depend on an organizations capacity and ability to measure and find out what the client requires. It also depends on the firms motivation to match the needs of the cleint. They also include integration between departments inside the orgainzation mainly known as cross functional integration.  The main aim of having cross funtional teams is to encourage coordination and teamwork so that mutual beefits can be achieved. (Angeles R. , 2005)

SUPPLY CHAIN AND TECHNOLOGY:

Technology can help generate information for a smooth flow of goods inside and outside an organization. Since supply chain management is such an important aspect of management, new revolutions have been coming out in this regard. Such a technology is radio frequency ID technology.

RADIO FREQUENCY ID TECHNOLOGY:

This technology is a breakthrough in supply chain mangement.  “The RFID technology has most notably been identified as a tool that has the capability of increasing the visibility of materials in a supply-chain context”.

(Angeles R. , 2005)

Its basic purpose is to provide information which is not delayed but in real time to members of supply chain such as distribuotrs, vendors, manufaturers, retailers etc.

Walmart, by using and implementing RFID echnology, could save $ 8.4 bilion annually

 (Roberti, 2002)

This technology helps in tracking the product wherever it is with the help of using tags on the products. This information can be sent to relevant computers and action can be taken by observing their status. It greatly helps in reducing paperwork.

RFID technologies have been greatly applied to the manufacturing sector but their role in the service sector as well is ever growing. The service sector is gaining momentum all around the world. 70% of United States’ GDP comprises of service sector contributions (Strassner, May 7–19, 2005)

In contrast to the manufacturing sector, the service sector does not tag a particular tangible product but it differentiated itself on how well the service is being provided as opposed to the competitors. In the service sector, there is no ownership of the offer being made.  It is includes the heterogeneous nature of products which are intangible and perishable and can also have the element of simultaneity. (Angeles R. , 2005)

Hence the focus basically in supply chain management is on the relationship with customers rather than the consumers. The process of using RFID technology is a process which includes direct contact with customers to positively impact the customer’s perspective and hence increase performance.

RFID can be used to gain information regarding the location of the customers. This information can be used to maintain and upgrade the consumer database. With the help of this database, a backward approach of delivering to the customer can be adopted. First the location of the consumer can be found which then can be coordinated with efficiencies with suppliers and hence better delivery to the final receiver of the service. The data from the customer database that an organization has can be combined with the information provided by RFID technology through tags on products and hence, improve service to customer. (Angeles R. , 2005)

One example of the use of RFID in the service sector is in a library to increase customer satisfaction by using RFID in automating the checkout process. Previously, bar codes were used for this process which could scan one tag at a time, but with RFID technology, as much as five tags can be scanned at a time. This decreased check out time and also results in the decrease of staff required for the job. The staff can then cater to customized demands by customers in the library. Also with RFID technology, the employees don’t have to wait for the customer to come in the service queue section for scanning and are free to roam around and help customers in information search.

E-INTEGRATION:

As talked above, the internet is nowadays widely used to coordinate order sheduling, inventory management, forecasting, calclation leads and coordination with suppliers and customers. The use of internat in supplychain thus, is called e-integration which have a positive affect on performance.

 Previously, fax or EDI was used used but interaction was limit and costs were also high. With e-integration these problems are solved. One of the most important trends in the industry relate to the coordination between units in the supply chain with the help of internet.

(Angeles R. , 2005)

USING E-INTEGRATION:

Although there are barriers in using e-integration in supply chain management, but research shows that these barriers are caused due to internal inefficiencies. If the organization lacks in technical support and know how, then it will be difficult to implement wed based supply chain integration. Hence, internal inefficiencies should be reduced as they are a source of preventing integration. (Frohlich, Fall 2002)

E-COMMERCE IN SUPPLY CHAIN MANAGEMENT:

            Like other uses of internet in SCM, e-commerce faciltates supply chain managementas it helps to keep the organization upto date with the changing consumer trends in the market and the organization can have a more proactive approach and can maintain is competitive edge by responding to the changing demands before the competitors.

E-PROCUREMENT IN SUPPLY CHAIN MANAGEMENT:

Internet is also used in e-procurement where organizations can order materials directly online without going to the hassle of direct costly interaction. It can also be used to manage inventory. Keep track of assets, complete documentation online and also complete paperwork relating to custom duty and quality measurement.

“The Internet again offers a natural platform to facilitate efficient procurement as numerous buyers and sellers find each other and transact according to some pre-specified protocols”.

(M. Eric Johnson)

E-COLLABORATION:

Collaboration is a very integral part of supply chain management and internet can be used to do e-collaboration. This is more effective as the collaboration can be done from anywhere in real time and time and resources can be saved.

BENEFITS OF USING IT:

 When supply chains are integrated with information technologies, the benefits are not only operational but strategic benefits are also seen. The costs are lowered. The perspective is more market based and it also gives the opportunity to select from a large supplier base to ensure the most optimal deal.

(Jaana Auramo, 2005)

There also exists a direct relationship between the integrated supply chain and customer satisfaction. If the supply chain is properly integrated, the product will be made available to the customer o time through proper channels and with increased quality and hence, will increase customer satisfaction.

There also exists a direct relationship between the customer satisfaction and the financial performance of the firm. This is easy to understand as a happy customer will come back to the company and the sales will increase leading to better financial performance. Hence, a direct relationship is observed between the service provided to the customer and the performance of the company. That is better quality services leads to increased profits.

There exist an indirect relation between financial performance and supply chain integration as opposed to a direct one with customer service. An efficient supply chain will not directly affect the revenues of a company but only if the customers are satisfied, then the indirect effect of that efficient supply chain setup will lead to increase sales and hence, better performance of the business. Empirical support for a direct relationship have not been convincing although some still believe in the direct relationship. The relationship of financial performance was not direct bit the relationship was indirect with the integration of supply chain.

(Shawnee K. Vickery a, 2003)

Conclusion

From the discussions above, the importance of information technology to stay ahead and competitive in this dynamic environment is re enforced. We have also focused on the future trends in this field and the need to keep ourselves updates with the changing trends as it can serve as a competitive advantage for our business.

References

Angeles, R. (2005). RFID technologies: Supply-chain applications and implementation issues. . Information Systems Management 22 (1) , 51–65.

CRM, F. o. (2007, April). Retrieved July 2008, from http://majendi.blogspot.com/2007/04/future-of-crm.html

ERP, L. t. (2008). Retrieved July 2008, from ERP WIre: http://www.erpwire.com/

Frohlich, M. T. (Fall 2002). e-Integration in the Supply Chain:Barriers and Performance*. Decision Sciences , Volume 33 Number 4.

HARDWARE, T. F.--. (2005). A Virtual Revolution . Retrieved July 2008, from Business Week: http://www.businessweek.com/magazine/content/05_25/b3938622.htm

Hedlund, J., & Ingman, A. (2008). Unlocking the value of CRM: from the perspective of a global IT-company.

Jaana Auramo, J. K. (2005). Benefits of IT in supply chain management: an explorative study of progressive companies. International Journal of Physical Distribution & Logistics Management, Vol. 35 No. 2 , pp. 82-100.

Long, L. a. (2005). Computer Information Technology in Perspective. 12th Edition.

M. Eric Johnson, S. W. (n.d.). e-Business and Supply Chain Management:An Overview and Framework1. Forthcoming in Production and Operations Management special issue on e-Business and Supply Chain Management .

Roberti, M. ( 2002). RFID: From just-in-time to real time. CIO Insight @ www.cioinsight.com/article2/0,1397,1496892,00.asp.

 Shawnee K. Vickery a, ?. J. (2003). The effects of an integrative supply chain strategy on customer service and financial performance: an analysis of direct versus indirect relationships. Journal of Operations Management 21 , 523–539.

Strassner, E. H. (May 7–19, 2005). Annual industry accounts: Advance estimates for 2004, Survey of Current Business, Bureau of Economic Analysis. . US Department of Commerce .

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