Business Cards

If you are serious about your business you must have business cards. They are cheap and are a great way to attract potential prospects or customers. Simply hand them out to people who you feel may be interested in your business.

Also, whenever I visit a restaurant, bar, or club, I'll leave my business cards in all of the bathroom stalls. (Just make sure nobody is in there of course... lol!)

And don't laugh at this! It really works. When I visit the bathroom an hour or two later, I'll find that all of my business cards are gone and I'll have a fresh new set of sales the very next day.

You can get free professional looking business cards at Vista Print, all you have to pay is shipping and handling.

Fliers

With today's technology, flyers are very easy to make. You can simply design a flyer online and just print it out and make copies. Then you can post them in area businesses where you feel your potential customers may hang out. (Just make sure you ask permission from the business owner.)

Or simply hand out your flyers to people you meets on the street. Many bars and clubs don't have a problem with posting flyers in their establishments either, especially if you are a patron.

And don't forget about supermarkets! Many have bulletin boards, at least here in New Jersey where I live, and you can post your flyer there. There are hundreds of people walking into supermarkets everyday and they are in a buying mentality. Take advantage of it and post your flyers often.

My Brochure Maker is a site that lets you create and print flyers or brochures online for free:

Automobile Advertising

What...? Yes you read that right! Your car is not only a driving vehicle but a great advertising vehicle as well. You can stick magnetic signs or plates on your car with your company name and/or domain name for all to see.

Your business can be exposed to hundreds, if not thousands of people everyday whether your car is parked, you are driving, or even when you are stuck in traffic. It's fairly inexpensive and a great way to "drive" home your message.

Here are a couple of sites to check out for this very sort of thing:

• I.D. It Plates
• Magnetic Signs

Those are just a few of the ways to advertise off-line. I'm sure you can come up with other clever ways as well.

You've got a brain... use it!

Basics of Financial Accounting

Dual Aspect:

 The dual aspect concept sets up the basis of accounting equation that derive financial statements. Accounting rests on the accounting equation Assets = Capital + Liabilities. Business transactions impact debits and credits of an account in equal amount.

Business Entity:

 The business entity states that a business enterprise is an entity distinct from its owners. Accounts drawn for the business are separate from owner's personal financial dealings. The owner and business are treated as a single entity, legally. For accounting purposes, they are two separate entities.

Going Concern:

 According to this concept, a business is expected to continue for an indefinite period of time. This assumption enables the business to spread the cost of an asset over the period of its economic life. It is not essential to calculate the current costs of assets each time financial statements are prepared. Assets are disclosed at cost less depreciation and not the current market price.

Accounting Period:

 For accounting purposes, the lifetime of the business is divided into arbitrary periods of fixed length, usually one year. At the end of each period, two main financial statements are prepared. First, the profit and loss account showing the profit and loss made during that period. Second, the balance sheet showing the position of a business as on a particular day.

Cost Concept:

The cost concept states that assets acquired by the organization are recorded at their cost of acquisition. This value is the basis for subsequent transactions such as charging depreciation. A balance sheet shows assets valued at their original cost less accumulated depreciation.

Money Measurement:

 The money measurement concept proposes to record transactions that can be attributed in terms of monetary value. Therefore, transactions such as strike in the enterprise or good management practices cannot be recorded in the financial statements.

Matching Concept:

The matching concept ensures that all revenues and costs are recorded in the appropriate statement at the appropriate time. The income and expenses should be matched and dealt within the financial statements for the period to which they relate, irrespective of the period in which the cash was actually received or paid.

Recording Accounting Information

Accounting is the process of recording the incomes and assets of a business to determine profits and analyze progress. It should be made sure that the recorded information is accurate in order to do a correct analysis. The basic presumption accounting is based on is that every business transaction affects two accounts.

Business Transaction Path

The business transaction path has the following in order to be followed:

Business Transaction:

 A business transaction is a single business event or exchange within or between groups for the purpose of business.

Journal:

 A journal is a book of account used to record a condensed and grouped statement of the daily transactions.

Ledger:

 A ledger is a book that contains the summary of accounts. All the debits and credits from a journal are transferred to the ledger.

Trial Balance:

A trial balance tests a ledger to discover whether the debits and credits balance. The equality shows that the items were correctly posted.

Preparing Financial Statements

The basic objective of financial accounting is to prepare financial statements. One prepares financial statements in form of profitability statements and balance sheets. Profitability statements comprise of accounts such as manufacturing and trading account, profit and loss account, and profit and loss appropriation account.

Balance sheets determine the health of the business at a specific point of time. The profitability statements show the business activities between two subsequent balance sheets. These statements are linked by profit that is determined in the profitability statements.

Before the financial statements are prepared, the values in the trial balance are matched. This activity ensures that all transactions are accurately posted in the ledger accounts. Depending on the nature of the item, all the trial balance values are posted in either the trading account, the profit and loss account or the balance sheet. All expenses and incomes find a place in the trading and profit and loss account. All assets and liabilities are recorded in the balance sheet.

The trial balance may not reflect transactions that occur after the preparation of the trial balance. Therefore, to show the effect of these transactions, one needs to post adjustment entries in the financial statements.

1. Courtesy and respect toward others at all times.
2. Knowledge of the product and if that knowledge is lacking, searching out the answers from others.
3. A willingness to provide more than is expected. Going above and beyond a job description to make sure the customer has a positive experience.

I was the lucky recipient of this at a downtown grocery store. I purchased flowers (two colors as well as baby's breath.) The person who wrapped them, took them out of the cellophane, then artistically arranged them before wrapping them in paper for me. He took the opportunity to go above and beyond. Would I return there to buy more flowers? You bet I will.

A friend recently told me about an unhappy experience she had at a car dealership recently. Her car would not start one morning and she thought it was likely due to an older battery. So, she called the dealership. A neighbor boosted her vehicle and she arrived at the dealership mid morning.

As it was a blustery winter day she was told that it would be difficult to predict when it would be ready for pick up. So after a couple of hours she phoned. Not ready. She phoned again in one hour. Not ready. So, she phoned again in about 1 ¼ hours. She said that each time she phoned she was pleasant and friendly. She was not a demanding customer. Once it was ready, the dealership sent their driver to pick her up.

She arrived at the dealership to pick up the car and was greeted by the Service Manager who said, “Well, maybe we'll call you every hour tomorrow just like you did us today”. After this sarcastic comment, my friend paid her bill and then was left to make her way to her car with her grocery bags and her dog.

She asked where her car was and the Service Manager waved in the general direction of the snow covered parking lot. She could not find her car in the parking lot, so the Service Manager went outside show her where it was. Despite the fact that it was covered in snow, and that my friend had her hands full, there was no offer to help brush the snow off the car. “There it is” he said and walked inside the building.

An apology was later given to this woman after she wrote a letter to the Manager, but my friend told me that she felt it was lacking in sincerity. She told me that the Service Manager referred to it as a “miscommunication” implying that he bore little responsibility for the situation. Sarcasm is not miscommunication, it is disrespectful.

No offer to give car washes, an oil change, or even have flowers on hand for the customer as a way to show the apology was genuine. It was a missed opportunity to turn around a situation that created negative feelings. Will my friend return to this car dealership? Not likely.

As she told me, she realizes that nobody is perfect and that people have bad days. But it is the response to the complaint that shows the difference between a place of business that genuinely cares about customers and one that doesn't.

How do you and your staff measure up when it comes to customer service? Are unhappy customers looked upon as an opportunity for growth and learning? How you treat your employees will reflect on how they treat your customers.

Some wise unknown soul said, ”If we don't take care of our customers, someone else will.”

• CRM as a competitive strategy - a strategic view
• Customer satisfaction and loyalty
• Relationship: selection and retention
• Customer service and service marketing
• Sales Force Automation (SFA)
• Implementation of CRM

Key concepts of CRM are:

• Comprehensive strategy:

  CRM at one end links itself to SCM - supply chain management and on the other hand the customer service and customer care. This makes a comprehensive strategy.

• Acquiring:

  This is about prospecting. Using effective sales promotion methods, prospective buyer can be acquired. It is about developing new customer as well as converting competitor's customers.

• Selection:

  You can't please all people at all times. You may not be able to serve and satisfy all the customers at the same time. There may be customers who may not be willing to have long time relationships with you. As a consequence you need to have selectivity in the customers as well.

• Retaining:

  Once a right customer is selected, we need to provide the customer with a good product and a better service which exceeds the customer requirements. Only then can the customer be satisfied and retention of a customer can be possible.

• Partnering:

  Partnership is about constantly striving to create better value for each other i.e. the buyer and the seller.

• Interactive communication:

  A clearly planned and focused two way, interactive communication is a very essential ingredient of CRM. A meaningful communication will always be an Interactive Communication.

• Technology + people:

  CRM is all about people and relating people to technology. This is all automation of people is all about!

• Mutually beneficial longterm relationship:

  It is all about the long-term relationship of the buyer and the seller. This overall results in the mutual benefit of both resulting in a long-term relationship.

Customer delight needs to be created instead only satisfying the customer. Customer service is about giving facilities and services that the customer asks for, or delivering service that is expected in today's competitive world. Most products require additional or long-term support from the organization. These traditional services include delivery, installation, lessons-in-usage, instruction manuals, repairs and maintenance etc. Customer care (and also customer delight) is going beyond the "expectation check list". Customer care is being proactive in developing relationship with your customer. Always remember “Good customers are worth keeping for life”. Great services can create a great experience and customer delight.

Customer Retention:

The point to be remembered always is that a repeat customer is the best customer. 6:1 is the ratio which means - you need to spend 6 times the money you spend in retaining an existing customer. Another view point is 5% increase in retention of customer can add 25% to 125% increase in profit. Essentially, retention is the key. However, not all your customers are worth retaining. You should select the customer for retention. These customers should be the right ones with whom you wish to establish a long term benefit for mutual benefit.

There are a number of benefits for selection of the right customer for an organization:

• It reduces cost
• It increases profitability
• It helps create goodwill for your organization
• It gets you good word-of mouth publicity
• It improves the possibility of greater customer satisfaction and loyalty

Thus, it's needless to say - select the right customer, have the right understanding of their needs and evolve a right way to satisfy them.

The Service Marketing Triangle

The Service Marketing Triangle shows the relationship and linkage between three elements of service marketing - Company, Customers and Employees. Three types of marketing happen between these 3 elements.

• Company to customers: External Marketing
• Company to employees: Internal Marketing
• Employees to customers: Interactive Marketing

External Marketing:

Internal Marketing:

Interactive Marketing:

Sales Force Automation (SFA):

SFA is Sales Force Automation. Understanding SFA begins with the study of basic selling process and the importance of FAB (Features, Advantage and Benefits) approach to selling. It then moves to the technology of Automating Sales process.

SFA is a technological tool to help sales people acquire and retain customers, which helps in reducing administrative cost and provides good basis for account management. It increases better selling chances for the Salesperson and more business for the company. SFA helps in the following ways:

• It helps a company to get customer retention and hence increase profits
• Customers get better information, better products or services, faster responses to their queries and hence this results in Customer Satisfaction

The reasons why SFA is important to CRM are:

• Reduction in cost of selling
• Increased revenue
• Easy availability of customer information
• Increased sales force mobility
• Meeting increased customer expectations

CRM Implementation:

The most difficult part of CRM is implementing it. Implementing CRM - making it a reality is the real challenge and the purpose of any CRM initiative. When do you say that CRM has happened? When:

• Your customer is more than satisfied; he/she is delighted
• Your customer attrition rate is minimal. Thus, the selected customer is retained.
• The bottom line improves: the profits multiply

Implementation starts with questioning the basics of your business; defining business, redefining your strategy, setting up plans, implementing and evaluating the CRM. Implementing CRM is about creating a change and an urge in your organization to become customer centric. The first important factor taken into consideration while implementing CRM should be people; because CRM is nothing without people. Secondly, technology and the process play should be taken into consideration. A good product or service, sound process, technology and able people are some of the important baseline requirements to begin with the CRM initiative.

Unless you have the CRM merits in place, it is not possible to judge if you are going in the right direction. CRM evaluation has to be in place and predefined before you begin implementing CRM.

Common causes of CRM failure:

• Treating CRM = Technology + Automation
• Large-scale systems with long-term promise are better
• Old organizational mindset
• Lack of CRM understanding
• Poor strategy and planning
• Lack of skills essential for CRM
• Inefficient or inappropriate software
• Lack of commitment

A famous saying in India states a customer to be God. It has all been from the Vedic ages but the fact being people have started noticing it as a specific field of management study for not more than five years, commonly known as Customer Relationship Management. You need to take care of your customer even for the slightest hiccup in his smooth ride on your product. All you need is to have a good professional relationship with your client.

You lose a customer when you don't meet their needs.

Business today is expanding in a manner water spreads being poured on an inverted cone. It has been expanding all over through verbal marketing, through advertisements on communication channels like TV and radio, through hoardings in public places, and the fastest mode of communication “The Internet”. The Internet is a perfect place for customer service. It provides an area for the customers to find the exact piece of information they need.

Customers today expect higher-quality goods, better service and quick delivery. This is where CRM comes in. It's all about understanding and following up with the customer needs, a good quality of product and service, and a fast delivery.

How does CRM improve your relationship with customers?

Some examples of its value to your business include:

• Expediting responses to customer inquiries,
• Increasing company knowledge of customers, and
• Identifying profitable business activities

Feedbacks should always be accepted from your customers in a positive manner. An appreciation from a client means working to get similar appreciation from the rest of your customers. But, most of the people do not accept the negative feedback from customers in a positive manner.

Instead of accepting it as a delta people generally retaliates against it. However, with the information gained from a CRM system which provides customer feedback, it should be used to improve products and services. This would also mean sharing information with your partners to ensure customer satisfaction.

What's the value of implementing a CRM?

Some of the values of implementing a CRM are:

• Your goods and services will improve based on your impact from customers. Valuable feedback from your customers will allow you to more directly meet their needs.
• You will increase the speed of your response to customer concerns. This will result in happy and loyal customers, which in turn will impact your company's bottom line.
• Your knowledge of your customers will grow. You will better understand your customer needs and will therefore be more able to meet those needs resulting in satisfied customers.

“There is only one boss: The Customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.” - Sam Walton.

Customer Relationship Management puts the business focus back on the customer where it belongs. CRM combines business process and technology to create a better understanding of customers. Consequently, Customer Relationship Management is also known as Client Relationship Management. CRM helps to identify new customers and retain existing customers. To reach consumers who will truly benefit from your services, it's important that marketing campaigns define clear objectives and goals directed at an appropriate audience. The audience is defined through CRM.

The Marketing Team of a company uses CRM to identify commonalities among clients. With this information the company's marketing strategy becomes more focused and effective. Sales Team as a consequence notices the number of new customers and profits from existing customers' increases as the company improves its ability to meet client needs.

CRM allows you to customize relationships with individuals to provide a higher level of service. An effective CRM system will help you exceed your customers' expectations by offering them what they need - before they have to ask for it. CRM can create a personalized approach. It can also create a personal approach to customer service.

CRM can ease the exchange of information throughout every department in a company, personalize interactions with consumers to increase customer satisfaction, assist in pinpointing potential clients and monitoring relationship with the current clients. In a nutshell, CRM will assist you in identifying new customers and retaining existing customers. It will streamline information exchange, and it will customize relationships with individuals to provide a higher level of service.

CRM won't make you smarter; it will help you serve your customers by identifying their expectations.

CRM focuses on enhancing service to exceed your customers' expectations. How is this accomplished? By allowing all the departments access to the same information. The second goal of implementing a CRM system is using integrated information to create top-quality service. Customers' don't want to repeat the same information over and over to everyone they speak with. You'll save time and minimize customer frustration by sharing information internally.

Consider a simple example: Getting help from a new friend is tough as compared to getting help from an old friend. Similarly, research has shown that it costs 6 times more to sell to a new customer than an existing one, and your odds of selling to an existing customer are 50% better than selling to a new one.

What are the goals of implementing a CRM?

Some of the goals of implementing CRM are:

• To create a sense of loyalty with your customers
• To realize higher profits through better customer relationships

An effective CRM system takes the customers' view, not the products' or company's view.

There are three stages in CRM. None is more important than the others, but you will need to make one your primary focus - without abandoning the other two,

• Acquiring new customers
• Increasing the profitability of existing customers
• Retaining existing customers

The first stage of CRM is acquiring new customers. Through existing customer testimonials, product quality and availability convenience, and innovation; you can attract new customers to your company. The next stage of CRM is increasing the profitability of those existing customers. Apart from enhancing relationships with the customer through cross-selling and up-selling, it also offers the consumer great convenience at reasonable costs. If you have everything the customer currently needs, make sure he knows it.

To truly see the benefits of the customer/seller relationship, you must sustain customer loyalty. The third stage of CRM is retaining existing customers. Not only do you have to offer products the market wants, but you must also offer what your customers want. Your goal is to retain your customers for life. Many companies focus in this aspect of CRM because the greatest percentage of sales comes from existing customers.

Focusing a company's goal on customer satisfaction is a major benefit of CRM. Another advantage of implementing CRM is that it redefines marketing strategy so that it is more effective. Transforming to a CRM system aligns your organizational structure with actual business operations.

A key advantage of implementing a CRM system is that it re-concentrates the single focus of product performance on to the customer. CRM is a bridge linking an organization to its valued customers. Implementing a CRM system dramatically affects everyone involved. It requires a political, cultural, and organizational change. CRM cuts a wide swath across the entire organizational body that it demands a more cohesive approach toward meeting goals.

Current incentive systems may work against CRM because they reward only a portion of the customer's relationships with the company. Therefore, your organization may lack an incentive program that supports a CRM system. The challenge of implementing a CRM involves the cultural resistance to the change it requires. You also need to embrace the international market and create an infrastructure to facilitate the new system.

To find out what your customer wants, you need to understand and identify the elements of the CRM loop. The CRM loop is the fundamental cycle of activity that drives CRM programs:

• Comprehension and Differentiation
• Development and Customization
• Interaction and Delivery
• Acquisition and Retention

The four stages of CRM loop are an interdependent and continuous cycle of activity. All your initiatives and objectives must be intrinsically connected to this core cycle of action to get the best results.

As you transition from one stage to another, you will become more adept at implementation processes and achieve deeper insights that will improve each successive effort.

So how does a CRM loop work? What are the purposes of the four stages and how they interrelate with each other? This underlying core of activity will be your primary method for gaining knowledge and understanding your customers. The CRM loop will also help you decide what subsequent actions to take. This helps you identify, connect, and hold on to your most valuable customers.

• Comprehension and Differentiation:

  As you learn, you will be able to zero in your valued customers quickly. And you will also attract new ones with similar learning's. Retention comes by listening vigilantly so you are prepared to modify your services when customers change their preferences.

• Development and Customization:

  Use analysis and research to comprehend what your customers' value. Then use your understanding to show customer that your organization is differentiating its services based on what they have told you and what you have learned independently.

• Interaction and Delivery:

  A basic principle of CRM is to develop products and services based on customers' needs and expectations. Although most companies can't afford to customize products for individual customers, they can customize the products for a proven customer sector.

• Acquisition and Retention:

  Besides marketing and sales channels, customers interact in many ways with your organization, including shipping and distribution and customer service. With new information, you can progressively enhance the value you deliver to your customer.

Value is the quality of product, the service, the convenience, the ease of use, the responsiveness, and the excellence of customer service. Value isn't just about the price of the product. A customer interacts with an organization in many ways, including shipping, distribution, and customer service.

The infrastructure provides the solid foundation, but the core competencies provide the heart and soul of a successful CRM system. It is here that the philosophy of CRM is expressed. The first vital core competency is the fine art of up-selling. Up-selling in a CRM environment means identifying your customer's needs and then matching their needs to complementary products and services. The result is a richer, more profitable customer relationship. One aspect of up-selling is event-driven marketing. By implementing up-selling software, you can track customer contacts and establish triggers to identify prospects for additional sales.

A second core competency of a successful CRM system is direct marketing. Direct marketing is the pre-sale interaction with potential customers. This involves the use of advertising techniques to influence and provide your customer with the information needed to make a purchase decision. As your business grows, you will be deluged with requests for information; be sure to manage the fulfillment end of this potentially overwhelming process.

The third core competency of a CRM system is customer service. The goal of an effective customer service program is to provide support and to assign, create, and manage service requests for the customer.

Walking hand in hand with the customer service is field operations, the fourth core competency. Field service is the hands-on extension of customer support. It comes into play when a problem cannot be solved over the phone.

In a nutshell core competencies of CRM are:

• Up-selling
• Direct Marketing
• Customer Service
• Field Operations

To involve the entire organization in CRM, you must be able to identify the benefits of such a system. What are these benefits? An effective CRM system will help you remain ahead in competition, tap into the world-wide market, instill loyalty in your customers, decrease cost, and increase profits.

Integrating a CRM system will help you decrease costs and increase profits, tap into the worldwide market, and remain ahead of the competition.

Effective sharing of client information throughout a company is the key ingredient for successful CRM.

Some examples of CRM information sources are:

• The Internet:

  Tracking visits to your website can give you a good idea of what customers are looking for some pages might get more hits than others indicating a demand for certain products. Using this information within a CRM framework will help you focus on customer needs.

• Customer Surveys:

  Surveys can be given online or through the mail. An effective CRM system can take this information and make it available to marketers, sales people, and customer service people. With a clear understanding of customer needs, each department is more likely to meet those needs.

• Customer Purchasing Habits:

  With data mining and other techniques, you can learn what your customers buy from you. What are your top selling items? Who's buying them? What isn't selling? Answers to these questions and more lie in customer purchasing habits.

• Customer Service Calls:

  Anytime a customer calls you is an opportunity to learn more about him. A CRM system designed for your company can help service representatives increase knowledge of your customers.

The second way to understand your customers is to integrate customer information into your company's system. This allows everyone access to customer information. Marketers can identify customer demographics. Sales people can generate new leads based on customer buying trends. Customer service based on the information gathered.

The Internet is driving a revolution of one-to-one marketing and mass communications.

Effective sharing of client information throughout a company is a key ingredient for successful CRM. The first key to successfully implementing CRM is Integrating Internal Business Processes. Creating a seamless flow of information throughout your company isn't always enough. You should include external business partners in your information stream. Sharing customer information is essential to meeting your customers' needs. Consider third party suppliers and vendors as an extension of your business, and use them to provide solutions for your customers. A CRM infrastructure using Web-based applications can eliminate communication hassles and cost overruns.

To successfully create your own CRM infrastructure, you must integrate computer systems. Theses systems are known as “enabling technologies” that work together to provide more fluid CRM system.

With more powerful applications in the future, this integration might not be necessary, but because methods of delivering information is so varied, you need a CRM solution that can handle information across all delivery channels.

• Legacy Systems:

  Many companies rely on 20 year old systems that cannot simply be replaced. Because of this fact, special software tools, such as “middle ware”, become part of the CRM solutions. This software helps integrate old legacy systems with new CRM applications.

• Computer Telephony Integration (CTI):

  CTI is used to manage incoming calls. It allows information about a caller to be entered into a CRM data repository. This information becomes a valuable part of the entire CRM process because it helps determine what solutions the caller requires.

• Data Warehousing:

  With all the information gained through CRM, data warehouses become invaluable tools. Not only do they store the enormous amount of information you have gathered, but they also supply you with the material needed for customer research. Data warehouses offer customer data for later analysis.

• Decision Support Technology:

  You need a way to analyze the information in your data warehouse. Decision support technology is a set of analytical tools that help you make decisions based on accumulated customer data. You won't get the most out of your CRM system without these tools.

A CRM system creates a new approach to customer service. To ease the transition, everyone in the organization must understand and contribute to the CRM process. The first step is involving the entire management team to establish the CRM strategy throughout the company. Adopt an approach that is consistent with your company's overall approach to its business. Involve leaders from marketing, sales, IT, and customer service. Discuss their future goals and explore ways that CRM can help them meet these goals.

The second step is involving the entire management team to define your CRM integration goals. Identify how you'll track your customers; what software is most appropriate, what vendors can help you, etc. Understand your customers and create a business plan to meet their needs.

Once you have defined your vision and established a strategy, its then time to measure company readiness. This is the third step for involving the entire management team.

The final step in involving the entire management team is to monitor progress through stages. Because of the complex nature of CRM, approaching is through stages. Because of the complex nature of CRM, approaching is through stages that will create a better chance of success. Create a time line for strategy evaluation. Set milestones you hope to reach and continually check your progress.

Through an effective e-CRM system, you can personalize interactions with your customers and expedite the closing of business transactions. e-CRM and data mining systems help personalize interactions with customers. It also creates interactions based on relevant customer information, and expedites business transactions.

e-CRM and data mining systems help personalize interactions with customers. It also creates interactions with customers. It also creates interactions based on relevant customer information, and expedites business transactions.

E-CRM makes it possible to recreate the customer service of the past. Companies can use technology to combine a personal touch with customized service and the illusion of the one-to-one shopping of the past. The four features of e-CRM are:

• Information Analysis
• Customer Personalization
• Direct Marketing
• Simplified Transactions

The first feature of e-CRM is information analysis. With e-CRM, your ability to collect and analyze information is more efficient. It will help you determine inventory sizing, product pricing, sales items, credit policies, and other business decisions. With the analysis of you will be able to effectively use the second feature of e-CRM: Customer Personalization. Individual relationships with customers can be created and maintained through e-CRM. An effective e-CRM system will gather customer preferences and ensure customer-made shopping experiences for each customer.

Technology allows mass-market efficiency with a personalized feel. You can recreate the shopping experience of a mom-and-pop store at minimal cost through the third feature of e-CRM: Direct Marketing. Customers can order goals online and give you permission to send them additional personalized messages about new products, sales item, and other services you want to offer. e-CRM allows you to simplify transactions, analyze information, and create effective direct marketing material.

Companies that focus on customer information and use that information to maintain relationships are most successful in the market place.

What is data mining? It is the process of analyzing enormous amounts of data to identify meaningful patterns. Data mining is used for:

• Research
• Process Improvement
• Marketing

Data mining is an important tool for lowering overhead costs. The first way data mining facilities business operations is as a research tool. Research and Development is a costly process that can be streamlined and automated through data mining. Data mining lowers costs from the beginning of the manufacturing cycle, during the research and development phase, by quickly shifting through vast amounts of information.

Manufacturing and inventory control is another area in which data mining can help your company cut costs. The second way data mining facilitates business operations is through process improvement. Data mining systems can monitor processes to ensure that variables can be monitored and connected through data mining. Although both research and process improvement; are valuable aspects of data mining, they are the least customer - oriented aspects of it.

The most successful use of data mining is in marketing. This is the third way data mining facilitates business operations. Data mining uncovers information that reveals buying behaviors of existing customers. All useful marketing information is available in your customer database. Data mining will help you sift (distinguish) through it all.

Data mining streamlines and automates research methods, improves business processes, and identifies valuable marketing information. Customer database are an unlimited source of information. They are important business tools, but they are technical aspects of data mining that require knowledge of algorithms, decision trees, and predictive models.

Some technical aspects of data mining are:

• Decision Support Technology
• Directed Classification and Prediction
• Undirected Association, Clustering, and Recognition

The first technical aspect of data mining is decision support technology. Decision support covers the entire information infrastructure system that companies use to make informed customer decisions. It's based on recognized data patterns. Data mining helps, identify those patterns.

• Data Warehousing:

  A data warehouse is a database that stores information from a variety of operational systems. It allows companies to view information as a single entity rather than as a collection of information bits.

• Online Analytical Processing:

  OLAP databases are often speedier and more clearly organized than data warehouses, OLAP databases organize information along specified variables and allow for more precise analysis of the information they contain.

• Integration of Decision Support:

  Facts churned out by databases and mainframe computers don't always create a vivid enough picture to create solutions. Decision support technology is a collection of software and hardware that allows you to visualize the information gained through data mining.

In data mining, you use data to build a model demonstrating how every record in your customer database can be categorized based on any combination of variables.

This method is the second technical aspect of data mining: classification is the method of categorizing record in a database by predefined criteria - for e.g. assigning customers to specific purchasing categories. Prediction is taking the mined customer information, analyzing it, and predicting how customers may react in the future.

Undirected data mining is an automated process in which similarities among all records in a database of customer records are found. The third technical aspect of data mining is undirected association, clustering, and recognition. Some technical aspects of determining are directed classification and prediction, undirected recognition and clustering, and data warehousing and OLAP.

In directed data mining, you use data to build a model demonstrating how every record in your customer database can be categorized, based on any combination of variables.

“Automated” salespeople had to rely on bulky, portable computers, barely legible visual displays, and capricious modem connections to use the software. In addition, software vendors of the time rarely consulted end users when developing applications. As a result, end user acceptance of the solutions was often poor. Many salespeople viewed SFA software as an “electronic leash” or, even worse, as a surveillance tool.

In this early period, IT solutions were sold as discrete, departmental packages, each one serving no more than 100 users. In a fragmented market, companies bought separate solutions for the field force and the call center, and the applications did not communicate with one another. SFA applications both exacerbated and were victimized by the notorious “silo effect”-different departments operating in isolation and maintaining separate information stores.

By the mid-1990s, leading CRM software vendors began to offer their customers integrated information systems. Applications for sales and service converged, the software became far more scalable, and applications for marketing were introduced. And as CRM software vendors sought more input from end users, the applications became far more user-friendly, leading to much higher rates of user acceptance.

Around 1998, CRM technologies took another quantum leap in response to the rise of global ecosystems-networks of customers, partners, suppliers, and employees all connected by the internet. To allow all of these players to participate in an organization's information flow, CRM developers added massive new levels of functionality to existing products while developing suites of new products to serve the emerging model of the internet-enabled organization.

CRM software vendors then developed software that would allow companies to provide their customers access to the organization across multiple channels. This development addressed an old technological challenge: How does one coordinate the information gathered in sequential customer interactions when some of it may come in over the Web, some into a call center, and yet more in a face-to-face conversation? The capability of CRM technology to solve this cross-channel synchronization problem propelled it into the next stage of market evolution.

Today's best CRM solutions have come to address specific vertical industry requirements while integrating unwritten business processes that historically have varied from division to division. The result is a higher degree of consistency, leading to improvements in efficiency as well as the integrity of customer-related information. Most recently, CRM vendors have extended the flexibility of their systems to allow organizations to deliver solutions via hosted or on-premise versions, or in any combination. In addition, they have integrated business intelligence to empower every member of an organization with relevant and up-to-the-moment customer and business data. Ultimately, these CRM solutions are critical enablers of the seamless, high-quality experience that customers now demand.

The Business Benefits of CRM

When executed appropriately, a CRM strategy can deliver significant quantitative and qualitative business benefits. The quantitative benefits are driven by two main factors: reduced costs and increased revenues. Looking at these two factors more closely, CRM solutions let organizations reduce the cost of acquiring, selling to, and serving customers, and they help organizations enhance revenue by increasing sales per representative, sales per customer, average order size, and other revenue-driving metrics.

Cost Reduction Benefits

By streamlining and integrating customer-facing processes and providing richer customer data to sales, marketing, and service personnel, CRM can produce significant cost reduction benefits in a few key areas: cost to acquire customers, cost of sales, and cost to retain and serve customers.

Decreased Customer Acquisition Costs

Effective CRM strategies help organizations better understand a customer's preferences, buying behavior, revenue, profitability, and purchasing frequency. Having this knowledge can reduce customer acquisition costs significantly. For example, within one high-tech company, the implementation of a Siebel CRM system helped the telemarketing group to dramatically lower the number of calls required to generate leads. The company's vice president of sales and marketing explains:

Under our old sales information system, our telemarketing people were deluged with irrelevant information-free-form, unstructured information that had been recorded by agents during previous calls. This random information often impeded their call productivity. With our account-focused CRM system, they see just the information they need to converse intelligently-service records, for example, or the fact that an account falls into a certain vertical market.

As a result, our telemarketing personnel can now make approximately 80 calls per day versus 60 before the CRM implementation, and the value of those calls has gone up. Our people's hit ratio-that is, the proportion of calls that translate into qualified leads-has gone from 1 lead for every 52 calls to 1 in 33. Most impressive of all, telemarketings success as a profit center-what we calculate as its "contribution margin" toward closing deals-has roughly doubled since we rolled out the CRM system.

Decreased Cost of Sales

CRM can reduce the cost of sales by increasing sales force productivity, enhancing partner-channel productivity, decreasing quotation-proposal generation time, and improving order-configuration accuracy. A communications company provides a detailed example of the way in which Siebel CRM technology can reduce the cost of sales.

Excess capacity in the telecommunications industry had driven prices down over the past few years, making it extremely difficult for communications providers to maintain profitability. The company sought to differentiate itself through a concerted effort to beat industry-standard intervals for service delivery. To accomplish this, the company had to significantly shorten its order intervals and focus on meeting the customer's requested due date. However, its existing legacy system had limited growth capabilities, poor integration with other systems, and inadequate data integrity. This led to increasing business costs due to the substantial effort and human resources required to meet its customers' dates.

To address these problems, the company replaced its legacy system with a Siebel CRM solution that significantly streamlined the order entry and validation process, allowing the company to meet customer-requested due dates faster and with fewer people. As a result of decreased order entry time, it reduced headcount in its dedicated order entry staff from 22 to 10 people, saving nearly US$500,000. Additionally, because the order entry process was much simpler, project managers could enter orders while talking to customers-increasing order accuracy and leading to higher customer satisfaction.

The company also cites the following improvements from its CRM solution:

• A reduction in average order entry time for direct access lines from 8 hours to 45 minutes .
• A 50 to 80 percent reduction in overall order entry time .
• Cost savings of US$10,000 each month through a reduction in time spent on account maintenance, security, and queries, and by eliminating paper files.

Decreased Cost to Retain and Serve Customers

CRM can lower the cost to retain and serve customers by deflecting simple customer service issues to the Web and streamlining the process of serving customers through other channels.

Revenue Enhancement Benefits

Because CRM strategies allow organizations to monitor, measure, and track every customer interaction, organizations can determine the precise results of those interactions and therefore calculate the return on every marketing, sales, and service effort. Indeed, with CRM capabilities, organizations can determine the profitability of each customer or account and thereby adjust their allocation of resources to each customer based on that customer's profitability. By extending this capability across all communication and distribution channels, an organization can optimize its business model. That is, it can reach the right customers and prospects through the right channels at the right time with the right product or service. These capabilities lead to improvements in key areas, including increased close rates, increased revenue per sale, and improved customer retention.

Increased Close Rates

By deploying robust CRM systems and processes, customer-facing personnel have easy access to all relevant account, contact, lead, activity, and product information they need to serve customers. Moreover, CRM technology ensures that information is provided wherever and whenever it is needed, leading to meaningful improvements in close rates.

Financial consultants at a company, for example, use the company's Siebel CRM system to view information about investors, such as income and investment preferences, and then target their investment pitches accordingly. Explains the company's Assistant Vice President of Sales Force Automation:

We are able to be so much more personal in our interactions now, With essential customer information right in front of them, our representatives are able to develop customized investment strategies and deliver them-along with every appropriate piece of marketing collateral-directly to the customer, right from their desks. This system has enabled us to improve our lead conversion ratio-that is, the percentage of leads that become new accounts-from 40 percent to 60 percent.

Increased Revenue per Sale

CRM can help organizations increase average revenue per sale by facilitating cross-selling and up-selling. For example, a company has developed a program called Personal Planning Service, powered by Siebel CRM technology, which allows the company to create personalized vacation itineraries for guests at select resorts well in advance of arrival. When a customer makes a reservation for one of the company's select resorts, the company starts building an itinerary based on the customer's requests and stored preferences. When the customer arrives at the hotel three weeks later, tee times have already been scheduled, dinner reservations arranged, and recreation itineraries created. The company has found that guests who participate in the program show noticeably higher guest satisfaction scores and spend an average of US$100 more per day on services beyond the room rate. They are also more likely to generate repeat business because they had a satisfying experience.

CRM technology can also increase average revenue per sale by helping sales representatives focus on the right deals-those that represent the highest revenue potential.

The CRM technology gives sales representatives a comprehensive view of all activities, opportunities, and service issues associated with any given account, enabling deeper selling of infrastructure management solutions into the account. For example, by allowing a sales representative to see that a company is currently managing a customer's computer network, the CRM software lets the representative engage in targeted cross-selling efforts, such as offering the customer a broader solution that encompasses the procurement of additional networking equipment.

Improved Customer Retention

Improvements in customer retention lead to increased revenue growth. Customer retention is a critical factor in determining a company's long-term financial performance. Consider the value of existing customers: they require no additional marketing or set-up costs, generally provide higher revenue per purchase, are less sensitive to price, and refer new customers. Consider everything together, and the financial return from retaining customers and extending their lifetime value can be enormous.

CRM lets an organization increase customer retention rates in a number of ways. First, CRM software provides powerful analytics that helps organizations understand the key drivers, timing, and predictors of turnover. Second, CRM marketing and campaign tools allow a company to develop models to target desirable customers at risk of defecting to another company with mailings, phone calls, and promotions. For example, one leading networking equipment manufacturer has used Siebel CRM technology in effectively tracking service contracts that are about to expire. “Since the system automatically alerts managers to approaching expiration dates,” says the company's director of customer service, “we're able to immediately go after those contracts and make sure they are renewed before the expiration date. This has increased our revenue from service contracts by 20 percent.”

Third, CRM technology can help a company improve customer retention by referring customers to alternative product and service offerings when a customer's primary choice is unavailable.

Additional Benefits of CRM

In addition to providing measurable benefits in the form of reduced costs and increased revenue, CRM technology provides many other benefits that are more difficult to measure. Some of these benefits include superior market intelligence, more customer-centric product development, improved forecasting and financial management, and greater brand equity.

Superior Market Intelligence

Because CRM databases are updated dynamically in real time, they provide an organization's sales, marketing, and customer service people with fine-grained and relevant information that can help inform strategic and tactical decisions. For example, at one leading energy company, CRM technology provides useful insights not only into broad market trends, but also into how individual customers make energy choice decisions. “Knowing why we win a deal, or why we lose one,” says a company executive; “provides a tremendous competitive advantage in a deregulated market.”

Product Development Tied to Customer Needs

By providing a comprehensive view of customer buying behavior, CRM technology can help companies tie product development efforts more closely to customer needs. At a leading software company, for example, Siebel CRM technology allows the rapid exchange of information between field sales personnel and product development groups. Because the system provides a field for Product Detail in the sales opportunities screen, product development personnel get highly specific information about potential deals and customer requirements. Says the company's directory of customer information services and that information leads to action.

For example, when a significant opportunity moves forward in the sales pipeline, the Siebel CRM system can send an automatic e-mail to the relevant product manager, and that manager can then ask the sales representative, "Is there anything we can do to help move this deal forward? Are there enhancements to consider? Should we send a technical support person on a call with you?" The exchange between the two functions is extremely rich. The CRM system is now really driving our product development.

Improved Forecasting and Financial Management

CRM technology can provide an organization with a more accurate picture of its sales pipeline, which leads to numerous benefits, including better inventory management, increased customer satisfaction, and stronger relations with the financial community.

Greater Brand Equity

While improving customer satisfaction and retention is clearly a revenue enhancement benefit, such improvements over time also lead to greater brand equity-a critical determinant of success in many industries.

Strong brand equity provides a competitive advantage not just by improving customer loyalty, but also by giving the brand owner greater license to introduce new products and services. When customers trust a brand, they are more willing to try new products and services offered under the brand's name. Organizations with strong brands thus enjoy an advantage when expanding into new markets.

Conclusion

In today's increasingly competitive marketplace, more and more organizations are turning to CRM as a means of driving corporate performance. Many of these organizations, however, wrongly assume that CRM is about technology. In reality, technology is merely an enabler of CRM. A complete CRM strategy must address each of the following areas:

• Effective customer segmentation. Companies must have a total customer view and divide their customer populations into discrete groups that share similar characteristics.
• Integrated multichannel strategy. Organizations need to synchronize their channels and balance the cost of each channel against other factors, including value to the customer, the customer's preferences, and each channel's profit potential.
• Well-defined business processes. Organizations must ensure that business processes are clearly defined and are based on customers' perspectives and needs.
• The right skill sets and mindset. Organizations must carefully manage change and provide the right training and incentives to bring about the desired behaviors.
• The right technology. Organizations require technology that provides a single view of customer information across all customer touch points, addresses specific industry requirements, works seamlessly with other technologies, supports multiple devices, scales easily, and provides support for global operations.

The key to creating business value with CRM is remembering that business strategy and technology strategy are inextricably linked. Companies that fall into the trap of thinking they can implement CRM capabilities based only on technology will fail. Those that take a more holistic approach will be able to achieve the greatest success in driving greater customer satisfaction, and ultimately, shareholder value.

When implemented effectively, a CRM strategy results in greater employee, partner, and customer satisfaction and improved financial performance.

Oracle identifies the following components as central to any CRM initiative:

• Effective customer segmentation
• Integrated multichannel strategy
• Well-defined business processes
• The right skill sets and mindsets
• The right technology

Effective Customer Segmentation

Customer segmentation-the process of dividing a market into discrete customer groups that share similar characteristics-is a critical component of a CRM strategy. Customer segmentation allows an organization to understand which customers are most profitable and how to most effectively market to, sell to, and provide service to these customers. With this knowledge, a company can determine which investments will drive the greatest returns.

Segmentation begins with the development of the customer profile, which includes a rich description of the key characteristics of a specific customer, including both basic data (demographics, purchasing history, and so on) and information derived from analyzing the customer's life cycle process. The customer profile encodes, for example, observations about which offers appeal most to the customer, which channel(s) the customer prefers, which product attributes the customer values most, how much the customer has spent in the past and is likely to spend in the future, and other issues of strategic relevance.

By analyzing the customer life cycle process, organizations can pinpoint significant differences as well as significant similarities among customers. The job of segmentation is to sort out which differences and similarities are most important across all customers, and then to divide the customer base into groups based on the relevant distinctions. Effective segmentation is greatly aided by the power of CRM technology, which gives organizations the ability to capture and analyze large bodies of timely data and to discern significant correlations among customer attributes. In addition, CRM technology provides a single view of the customer across all company touch points. Having this holistic view is vital to segmentation efforts.

In the past, because organizations had no easy way to capture, consolidate, and analyze customer data, their segmentation strategies were limited and often based on criteria of little strategic value (such as geography). With CRM technology, on the other hand, organizations can segment customers according to far more complex and less obvious factors, such as channel preference, profitability, buying patterns, and other meaningful customer attributes.

Integrated Multichannel Strategy

For a CRM strategy to be successful, a company must offer its customers multiple ways of interacting with the organization. Companies today can no longer compete effectively with only one channel.

Not so long ago, most organizations had one primary distribution channel. For example, consumers could buy General Electric refrigerators any way they wanted-as long as it was through a GE retailer during store hours. Customers could order products from L.L. Bean any way they wanted-as long as it was over the phone to the call center. In this world of fixed, single-channel distribution, customer relationships were relatively straightforward.

Today, however, market forces and new technologies are dramatically changing traditional channel structures. Whether through the click of a mouse, a toll-free call, or a visit to a store down the street, today's customers can defect to a competitor with unprecedented ease. In this climate, a single channel simply cannot serve customers effectively. Complicating the marketplace even further, customers traverse channels in varied patterns-from the Web to the call center, back to the Web, and so on-while expecting to be recognized every step of the way in an ongoing dialogue with the organization.

As a result, organizations need a clearly stated, integrated, multichannel strategy that satisfies the following requirements:

• Aligns the right products to the right channels
• Balances customer needs and channel costs
• Enhances the customer experience

Aligning the Right Products to the Right Channels

Companies can use any number of channels to market to, sell to, and provide service to their customers. Options include field sales, retail outlets, call centers, resellers, the internet, and wireless platforms, to name just a few. In designing a channel system, a company must consider which channels are best equipped to support the company's products and services, meet the needs of specific customer segments, and support each stage of the buying cycle.

For example, one online pet store, no longer a going concern, learned quickly that selling 50-pound bags of dog food to an older demographic via the Web was not a sustainable strategy. The costs associated with shipping the 50-pound bags to consumers priced the product out of the market, and the low internet usage among the target audience further limited sales.

Balancing Customer Needs and Channel Costs

Channel investment decisions are based on understanding two things: what value a channel offers to customers and at what cost. Channels must be evaluated in terms of their value proposition to customers and their costs to the company. Additionally, channel investments must be made with a strategic objective in mind, such as growing market share for a particular product or increasing overall revenue. Many managers have too quickly decided that a lower-cost channel must be more profitable and, therefore, all products are driven through that channel.

However, cost alone is a limited method of assessing channel strategy. A more thorough analysis should answer the following questions:

• Will the lower-cost channel effectively deliver value to customers?
• What type and proportion of customers will migrate to the lower-cost channel?
• Will the order or deal size be affected?
• How much will it cost to educate customers?
• Will the more expensive channel still be needed to serve some customers?

Enhancing the Customer Experience

Traditionally, companies operated under the assumption that building the best product was the key to gaining market leadership. However, with increasing product "commoditization" and increasing demands on customers' time, companies are realizing that how they market to, sell to, and provide service to customers is just as important as what they sell. Customers demand the ability to conduct business with an organization on their own terms, and they do not want to have their time wasted by inefficient company processes.

To meet customers' increasing demands, companies must take a couple of key steps toward enhanced customer satisfaction. First, they must provide customers with self-service options. Customers should be able to visit a company's Web site at any time to check the status of a service request, reorder a product, or resolve a billing inquiry. Providing this type of service not only increases customer satisfaction, but also lowers a company's customer support costs.

Second, companies need to ensure a seamless experience for customers across all channels. For instance, if a customer is trying to place an order online and encounters difficulties, the customer should be able to call a customer service representative and pick up the transaction where it was left off on the Web. A customer-centric organization will have this capability, while an organization that is not customer-centric might ask the customer to begin the transaction over again with the phone representative, wasting the customer's time and the company's money.

Well-Defined Business Processes

Automating an ill-defined or inefficient business process will only accelerate the pace at which an organization achieves poor results. A CRM strategy, therefore, must focus on redesigning customer-facing processes based on the perspectives and needs of the customer.

Each of these processes needs to be examined-not in isolation, but in terms of the way they are linked to other processes. Consider just three processes that are often poorly defined in the development of a CRM strategy: lead management, call routing, and service-ticket tracking.

Managing Leads

Lead management is the process of generating and or identifying a lead, qualifying that lead, and converting the lead into a sale. Within a multichannel system, leads may come into an organization from any number of sources: field sales, the call center, field service, a partner organization, or the Web. Given this complexity, organizations must clearly determine which person or department is ultimately responsible for closing leads, because this determines how leads should be routed. The organization also needs to determine how to define a qualified lead. Without a clear definition, leads of poor quality will be routed to the people responsible for closing them, resulting in frustration and lost sales productivity.

Call Routing

Many businesses-especially those organized by line of business-have not defined routing processes that can readily direct inbound callers to the most appropriate response person. The negative results include delays, frustrated customers, and abandoned calls. Therefore, before implementing CRM technology, organizations need to define optimal routing processes. Ultimately, a customer should be able to call into any point in the organization-from the front desk and the call center to the technical services department-and be routed to the appropriate person without being disconnected.

Service-Ticket Tracking

It is imperative that companies have clear business rules for managing inbound service requests. These rules should define exactly how resources will be dispatched to fix a customer's problem and how status updates will be shared as the issue is being addressed. In many organizations, call center representatives are unable to track the progress of work being done by field technicians. This makes it impossible for them to keep customers apprised of a service-ticket's status. The processes for sharing service request information should be clearly defined before automating those processes with CRM technology.

The Right Skill Sets and Mindsets

Because a CRM strategy requires a company's various departments to work more closely together, it changes the dynamics of how people interact and how a company makes decisions. While CRM technology facilitates collaborative decision-making, this very virtue can create tension in fragmented organizations whose members take proprietary attitudes toward data ownership. Managing change is thus critical when implementing a CRM strategy.

The change management required by CRM entails the realigning of skill sets and mindsets. Teaching technical skills without changing attitudes will lead to poor user adoption-one of the recurrent hallmarks of failed implementations.

To support the culture change that CRM requires, many companies have found it necessary to realign their reward systems. This means, for example, that customer satisfaction scores and customer retention will carry more weight in the organization's compensation program than customer acquisition. In addition, the organization may have to reconfigure its commission scheme to support a multichannel strategy. At Cisco Systems, for example, salespeople receive commissions for repeat orders that come in over the Web or through the call center, because Cisco Systems wants its sales force to drive as much business as possible through these lower-cost channels.

The Right Technology

The right technology is the final linchpin in a CRM strategy because it enables an organization to track every customer interaction, regardless of where, when, or how the interaction occurs. The right technology will satisfy the criteria explained in the following sections.

Multichannel Support

A CRM solution must provide an integrated family of sales, marketing, and customer service software applications across all channels, including field sales and service, call centers, resellers, and the internet. This creates a closed-loop system for capturing, organizing, and leveraging detailed information about customers, prospects, and partners so that every customer-facing employee and process operates from the same comprehensive store of logically centralized data: The right hand always knows what the left hand is doing.

For example, a field sales representative can use a laptop to connect to the corporate customer database before making a customer call and find out that the customer had earlier that day logged onto the corporate Web site and spent 15 minutes viewing several recently posted pages detailing a new product offering. Armed with this information, the representative can review the latest positioning information about the new product and prepare a tailored presentation.

Additionally, a consolidated customer data source lets an organization determine the preferences and economics of customer segments. Supported by this knowledge, an organization can determine which marketing campaigns and offers to target to which specific customers, how to design new products and services to meet customers' additional or changing needs, how to best provide service and support, and how to reward and express appreciation to the organization's best customers.

Industry-Specific Functionality

Regardless of the amount of pre-built functionality a CRM application offers, enterprises typically develop supplemental functionality so that their CRM solution fits their unique business processes and needs. The degree to which they must do so, however, depends largely on the number of unique requirements they have and the amount of pre-built functionality an application offers. Accordingly, organizations should select applications that offer extensive pre-built functionality to support the business processes for their particular industry. By scrutinizing the pre-built functionality available in a vendor's offering, organizations can avoid needless costs associated with reinventing the wheel.

Scalability and Global Support

Many employees throughout an organization, including personnel in sales, marketing, customer service, and back-office functions, use CRM applications. In addition, increasingly large numbers of customers interact with these applications through online self-service channels. And, in the case of employee relationship management applications, the user base might include every member of the workforce. CRM applications, therefore, must be highly scalable and flexible enough to be delivered any way users prefer-in both hosted and on-premise versions, or in any combination.

In addition to scalability, CRM applications must also provide multilingual, multi-currency support as well as support for multiple time zones. With this support, global organizations can implement the applications in multiple languages while maintaining a single, unified repository of customer data across the different languages. This allows organizations, for example, to consolidate sales forecasting information across different global regions and to analyze data regardless of the language of the underlying customer interactions.

Flexible Deployment Options

Companies of all sizes utilize CRM technology to better meet the needs of their customers. As CRM initiatives expand across regions, functions, channels and markets, CRM vendors have introduced a variety of deployment options including web hosted, private hosted, on premise and combinations thereof. The selection of the correct deployment option is critical to the success of CRM within an organization. The table below provides some key insights to consider when selecting a deployment option including functionality, deployment time frame, available IT resources, budget and attitudes toward outsourcing.

Support for All Devices

Today's organizations take advantage of a broad range of information and communications devices, including desktop PCs, laptops, hand-held devices, and cell phones. A state-of-the-art CRM system must support all of these devices, whatever the underlying hardware and operating systems, and must work seamlessly across devices. For example, users of mobile devices (such as laptops and hand-held computers must be able to easily and effectively synchronize information stored locally on their device with the system's centralized database. Without this capability, mobile personnel will be out of sync with the rest of the organization, a situation that can significantly undermine sales effectiveness.

Creating a company that focuses on e-commerce requires an effective e-CRM system. It's a new way of doing business that capitalizes on the global marketplace. One benefit is setting buy-in from your entire staff by creating a better understanding of what e-CRM can do for your business. It will also help you identify the driving forces of your competitors and create a clearer picture of the global market place.

Understanding the driving forces behind e-CRM will help you get buy-in from your entire staff, understand what sort of effort an e-CRM system requires, and identify the driving forces of your competitors.

How does e-CRM affect your business? It can help create marketing campaigns. It can increase customer retention. It can improve internal business processes.

e-CRM is an essential part of today's business world, regardless of how you perceive it's effect. What is fueling the interest in e-CRM? These forces are:

• Economic drivers
• Marketing expectations
• Technological advancements

One of the driving forces behind e-CRM is the pressure to remain competitive in the business world. Many companies are interested in the low costs and efficient processing of e-CRM. The first force that leads to e-CRM implementation is economic drivers. Internally, companies want to decrease costs and streamline business processes. Externally, those companies must maintain relationships with their business partners. E-CRM can help then meet both these goals.

Improving customer satisfaction and acquiring new customers is another key aspect of e-CRM. Marketing departments are central ingredients to accomplish these goals. The second force that leads to e-CRM implementation is marketing expectations. As the market becomes saturated with new products delivered online; it's important to create advertising that differentiate your products from others.

New customer leads: Competition is fierce, so we need any advantage we can find to acquire new customers. Through e-CRM we can more accurately identify our target audience. Prospecting for new clients is less costly and more effective when we use e-CRM in conjunction with our website.

Improved relationship with customers: We can offer our clients more detailed product information than ever before. And e-CRM provides an outstanding marketing tool that helps identify client needs. Along with other factors, e-CRM definitely improves our relationship with our customers.

Customer loyalty: We want our customers to come to us for all of their purchasing needs. By identifying our competition and offering new needs we can maintain customer loyalty. e-CRM helps us identify these needs and plan for the future.

The third force that leads to e-CRM implementation is technological advancements. Information can be stored and transmitted more quickly and cheaply than ever before. With advances in technology, customers have more buying options available to them. Your business must stand out from the crowd.

Some forces that lead to e-CRM implementation are marketing expectations, economic drivers, and technological advancements.

The first two business functions addressed by e-CRM go hand in hand: sales automation and marketing automation. How does e-CRM handle these functions? Sales people are given access to customer information to assist them in up-selling and cross-selling. What does the customer expect or need? e-CRM will help identify customer needs through data-mining processes. It will then share findings throughout the company to create complete view of the customer.

In marketing, employees are provided with new ways to generate leads and target advertising to appropriate audiences. Marketing automation is heavily based on data mining as well. This aspect of e-CRM allows you to learn more about your customers.

e-CRM offers a number of easy to meet customer needs. While you can use it to improve business practices, its main focus is improving your relationships with your customers. The third business function addressed by e-CRM in customer service.

e-CRM can help you effectively identify customer problems and needs. Along with meeting customer expectations, e-CRM provides opportunities for cross-selling and up-selling, which can increase revenues.

With your suppliers and distributors just a mouse click away via computer networks, it's easier than ever to maintain relationships with your business partners. This is the fourth business function addressed by e-CRM: business partner relationships. e-CRM allows you to maintain close contact with third-party distributors, suppliers, and re-sellers. It also improves relationships with your suppliers and allows you to have instant contact with your partners.

e-CRM allows for the automation of sales, improvement in customer service, and better business partner relationships.

e-CRM gives salespeople access to customer information to assist them in up-selling and cross-selling. It provides new ways to generate leads and target advertising.

If one has an effective e-CRM system in place, you will be better able to identify and address customer satisfaction problems.

e-CRM is not necessary for the creation of peer focus groups. It allows one to identify consumer needs through data-mining processes.

e-CRM keeps one in continual contact with third-party distributors, suppliers, resellers, and partners. It improves relationships with business partners. There are hundreds of software options available through e-CRM. But, in general they all serve one purpose: improving standard business practices.

To fully realize the positive effect of the Internet on sales, you must integrate web services into every department of your company. This means educating management leaders.

Educate employees in the new processes involved with e-CRM. Integrate the system throughout all the company's internal and external processes. This is the second principle for improving business practices through e-CRM.

To build trust and loyalty with your customers, you must accurately identify their needs. Effective e-CRM depends on accurate analysis of customer information. The key methods of recognizing customer expectations are:

• Analysis
• Categorization
• Forecasting

Without a way of examining data to personalize interactions, one won't get the most out of one's e-CRM system. The first method of recognizing customer expectations is analysis. Data tools used with e-CRM allow one to analyze the buying patterns of a customer. Through e-CRM software, one can create queries that will help one-answer questions about your customers' needs. One can also use these tools to identify faulty business practices and improve customer satisfaction.

After analyzing information, one must organize it to help discover customer-buying patterns. The second method of recognizing customer expectations is categorization. Use customer information to determine customer satisfaction levels to product type, region, age demographic, or any other category one chooses. It's also important to analyze and categorize information correctly to avoid making faulty assumptions.

The third method of recognizing customer expectations is forecasting. Take the information you have gathered and, based on what you have learned about your customers' behavior; predict what your customers will do in given situations.

You're probably familiar with a traditional warehouse. It's a storage area in companies maintain an inventory of products for later delivery to customers. So what's a data warehouse? It's basically the same thing - except rather than storing tangible material, information is stored. Rather then requiring warehouse workers with forklifts, data warehouses require a system of software applications and query tools that gather and organize the “inventory”.

Data warehousing can be invaluable tool in maintaining and electronic customer relationship management (e-CRM) system. It's a method of storing business information gathered from customers, suppliers, and other vendors for later use.

A data warehouse functions by storing customer information in databases for easy access. The information is then used to:

• Identify customer trends
• Solve business problems
• Gain a clearer picture of one's business practices

Basically, a data warehouse gathers and organizes data. This data is then available for analyzing and measuring business trends. Data warehousing is a method of compiling information from various sources and centralizing it for easy access. Data warehouses are used with query tools that perform tasks specified by the user. These queries offer information that help lead to better customer service, product improvement, and better business practices.

People without extensive database knowledge can use data warehouses. Understanding the technical aspects of data mining and warehousing is not necessary to perform simple analyzes of one's customer information. Query tools allow even the most inexperienced user to use a data warehouse. The main components of data warehousing are:

Conversion: A data warehousing system includes applications that ensure customer data can be stored to work without any format. These data are manipulated to create consistent records for later queries.

Extraction: The data are managed by applications that point search tools in the proper directions when running a query. If any information is changes, extractions and transformation tools are updated. This enables one to quickly search for key words or organize information by specific data fields.

Delivery: Data warehousing applications retrieve, display, analyze, and control information for your e-CRM needs. This information can be shared through all types of computer systems, from hand-held computers to mainframes, so everyone can access it.

Before e-CRM, providing personalized service to every customer was not cost-effective. But now technology offers companies the change to improve service for each and every customer. The first method of using technology to personalize customer service is tailoring the customer experience to individual needs. e-CRM in conjunction with an effective data-mining system gives all the information one needs to tailor the customer shopping experience.

Technology allows one to interact with thousands of customers with one simple e-mail. The second method of using technology to personalize customer service is using subscription tools.

Many customers prefer speaking with sales representatives to ordering products online. One must use one's e-CRM system to maintain relationships with these customers as well. The third method of using technology to personalize customer service is decreasing one's reliance on the Internet.

With all the interactions with customers throughout a year, it's important to avoid inundating them with unwanted information. The first method of improving the transaction process through e-CRM systems help maintain harmonious relationships with your customers by sending information only to customers who want it. Receive permission to send e-mail or to call with offers. Use the online ordering process to learn more about one's customers.

Even after one has reached customers, they won't jump into a transaction. They want time to measure one's products and compare them to the competitors'. The next methods of improving the transaction process through e-CRM are negotiating and closing transactions. By negotiating, one can offer customers samples, let them test products, and discuss options for sales and warranties. All of this negotiating can take place online by creating an interactive Web site.

An overlooked aspect of the business relationship is post-sales support. The last method of improving the transaction process through e-CRM is providing customer support after the sale. Offer upgrades, useful accompaniments, warranties, and service plans, and then follow through with the proper support. To improve your retention of existing customers, you must be more than a product distributor. Impress your customers by maintaining relationships with them.

The transaction should not be overlooked in the customer service process. Just because a customer agrees to purchase your goods doesn't mean your role in the sale ends.

If a company is new to data mining, the first way to develop data-mining capabilities is by getting outside help. One can hire the expertise from an independent consulting firm, a company that supplies data-mining software, or a data-mining center. If a company doesn't have the skills internally, it would need outside help, and if one only expects to need data-mining capability once, using an outside data-mining center may be the best option.

There's a good chance that many of your company's data-mining needs are similar to the needs of other companies in your industry or across industries. In that case, it's very likely that software already exists to handle your needs. When creating your e-CRM system, you'll have various data-mining options to choose from. Of course, that doesn't mean the fit will be effortless.

If your e-CRM system is going to become an essential part of your business strategy, you'll probably want to develop your data-mining capability in-house. You may still use outside expertise and commercially available software. However, your focus will be on developing the skills and capabilities within your company's personnel to manage and implement the data-mining system.

A company's specific situation will dictate the primary approach it will use to develop a data-mining capability. Factors that need to be considered are the extent of existing-in-house expertise and the degree to which the need for data mining is short-term or permanent. The availability of software addressing the company's needs is another factor to consider. While one approach may drive the development process, there's a good chance that your company will use elements of more than one approach.

Data mining is itself a set of techniques for seeking patterns in data. Some techniques work with numerical data while others work with categorical data. This means the technique selected must suit the type of data being used or the data must be transformed to a suitable form. The major data-mining techniques are listed below:

Cluster Detection: This automatic process seeks natural clusters in the data. It is most commonly applied when you suspect there may be correlations in the data seek but aren't sure what they might be.

Decision Trees: Decision Trees are used to sort data into increasingly smaller categories. They are used to classify records but can also be used to predict outcomes.

Neural Networks: Neural Networks are more complex than decision trees but are very effective for producing predictions. They work well in conjunction with decision trees.

Used in conjunction with OLAP, statistical tools can add mathematical precision to the analysis of customer relationship data. It can help identify correlations between demographic factors such as income and product preferences. It can also provide information about response of particular customer segments to marketing campaigns.

Analytical techniques supporting decision making, particularly in e-CRM, have been advancing rapidly in recent years. Rapid acquisitions of new capabilities by the major providers of analytical software now promise even more integration of the diverse techniques. Companies moving aggressively into e-CRM, therefore, are likely to have even more powerful analytical tools to work with in the future.

Once a customer centric data capture and storage capability has been established in the organization, analysis and segmentation become the tools that allow personalization and campaign planning.

The most effective electronic customer relationship management (e-CRM) systems don't stand alone. They are integrated with some combination of call centers, direct mail marketing, sales, and customer support. Some categories of e-CRM support that are generally available are:

• Marketing automation
• Sales-force automation
• Customer service
• Data gathering and analysis

An effective e-CRM system is more than just a transactional Web site. It must include active plans to capture new customers and retain existing customers. Marketing campaigns support both of these goals, and customer service is also vital to retaining customers. Depending on the industry, marketing plans may include contact through a combination of person-to-person, advertising, direct mail, Internet, and research.

When a company implements e-CRM, it generally purchases at least part of the automation technology from outside vendors. Packages provided by vendors will include some combination of the enlisted capabilities:

• Marketing management automation
• Sales-force automation
• Customer service
• Data analysis

Most marketing automation support packages take advantage of the tremendous capability the Web offers for capturing demographic and other data to enhance customer segmentation and targeting. These can provide a solid platform for effective marketing campaigns.

It's unlikely that one will find a single vendor who provides integration of all four categories of e-CRM support. The tendency, however, has been to include increasingly broader capabilities in integrated packages. When one is responsible for identifying sources of e-CRM support, the key is determining what mix of customer service, marketing automation, sales-force automation, and analysis one needs.

SAP has designed an R/3 application module for business functionality in every business area in a company. R/3 application modules are integrated. So when a change is made to one application module, R/3 automatically updates the corresponding data in the other application modules. The automatic update of information in R/3 occurs as soon as data is entered into the system. This is referred to as “real-time” processing.

The application modules are integrated into a work flow business events and processes across department and financial areas. Any business that wants to fully integrate its business processes must use on source for customer, product, and supplier data. R/3 allows for this by providing a set of master records for the enterprise. This means that an entire company can share the same customer or material information that is entered in the R/3 master records.

The integration of application modules in real-time allows all the employees in your company to see the most up-to-date information in real-time at their desktops. It also reduces data redundancy. Globalization is one of the biggest challenges facing any organization seeking to integrate its business processes. A business system must be capable of supporting all of an organization's offices, across the globe. The R/3 system has no organizational or geographical boundaries. It is designed for international use and supports multiple languages, currencies, and taxation systems.

To examine what application modules do and how they connect to each other in more detail, let's take a look at the following application modules:

• Sales and Distribution (SD)
• Materials Management (MM)
• Financial Accounting (FI)
• Production Planning (PP)

Let's say a customer has ordered 100 motors from your company XYZ. You use the Sales and Distribution (SD) application module to enter the customer's request for the motors into R/3. This is done by creating a sales order. Once a sales order has been created, the Sales and Distribution module generates a delivery document, which contains information needed to ship the motors.

For example, the delivery document informs warehouse managers which motors to collect from stock. Once the motors have been shipped, an invoice is created to bill the customer. Materials Management (MM) application module is now used for procurement and inventory management. Elements of this application module include:

• Invoice verification
• Material valuation
• Vendor evaluation

The Financial Accounting (FI) application module manages and reports on sub ledger accounts using a chart of accounts that is defined by your company. Examples of these sub ledger accounts include:

• The General Ledger
• Accounts Receivable
• Accounts Payable

The Production Planning (PP) module is used to plan and control the manufacturing activities of a company. Some of the elements of the Production Planning module are:

• Bills of materials
• Sales and operations planning
• Material requirements planning
• Production orders

Let's look at R/3 integration by examining how the Sales and Distribution application module integrates with other application modules when you create a sales order.

• When a sales order is created, integration occurs between the Sales and Distribution module and the Financial Accounting modules. This is because R/3 checks the customer's credit limit, which is stored in Financial Accounting. Another reason is that the creation of the sales order updates your company's cash forecast, which is also stored in the Financial accounting module.
• When you create a sales order, Sales and Distribution integrates with the Materials Management module. This is to verify that the ordered material will be available on the requested delivery date.
• Sales and Distribution integrates with the Production Planning module when materials entered on sales orders use a planning strategy, such as make-to-order. When this happens, R/3 automatically creates a production order in the Production Planning module.

Application modules share a common user interface and architecture. They are also navigated in the same way. So in addition to being integrated technically, they have an integrated look and feel.

Other R/3 application modules include:

• Controlling (CO)
• Fixed Asset Management (AM)
• Project System (PS)
• Work flow (WF)
• Industry Solutions (IS)
• Human Resources (HR)
• Plant Maintenance (PM)
• Quality Management (QM)
• Enterprise Controlling (EC)
• Investment Management (IM)
• Treasury (TR)
• Service Management (SM)

When R/3 is first installed, each application module will need to be customized to suit a company's business needs. The groups of employees from a company who implement and configure R/3 are commonly called the project team or the implementation team. Sometimes companies implement a core group of R/3 application modules, and then add additional modules or functionality over time.

Project teams can customize R/3 tables, reports, and interfaces. R/3 project teams configure the application modules to increase the efficiency of a company's business processes. R/3 can process and generate information in several ways.

Batch input is R/3's standard method for entering a large number of records from legacy systems or routine interfaces. The R/3 business work flow links company-specific work processes to the business processes of R/3. The business work flow processing capability is a way an R/3 event can trigger one or a number of other events. Work flow applications control the flow of information and documents from one work center to another.

Let's see how the business work flow applies to handling a customer order. When a user is processing a sales order for a customer who has exceeded their credit limit, a supervisor might need to approve the acceptance of the order. As a result of R/3's business work flow, a message is then sent to the supervisor's inbox. The message informs the supervisor that a sales order is waiting for credit approval (Each user on R/3 has an inbox that is part of the R/3 mail system. This mail system handles internal and external mail, system notifications, and work flow items).

R/3 records business transactions and activities by creating documents for them. This is called the document principle. R/3 uses the document principle to record information for the business activities your company carries out.

A key feature of successful business integration is that information should be entered only once. R/3 facilitates this requirement by rolling information down the business process. Rolling information means that the system copies or transfers data from one document into another, thereby reducing data entry and making problem resolution easier. For example, during the customer order management process, information in the sales order, such as the customer name, materials or services requested, and so on, is copied into the delivery document. And all the information from the sales and delivery document is copied into the invoice.

The management of a company needs to be able to retrace the steps of a business process in order to see what caused a situation. They can do this because all R/3 documents are linked and because R/3 has drill-down capability. Using drill-down capability, one can establish the document numbers of all documents connected to a sales order.

The chain of documents in R/3 is called the document flow. The document flow provides the history and status of related documents in R/3. The output processing capability allows to exchange information between a company's business partners and employees. One way you can use the output processing capability is to send confirmation of an order to a customer. Another way you can use it is to bill a customer for a delivery.

R/3 provides several ways to send and receive information. R/3 provides several ways to send and receive information. These include:

• Print
• Fax
• E-mail
• EDI (EDI is the acronym for Electronic Data Interchange. It is a standard for the transfer of data between companies using networks such as the Internet).

The information that is sent to business partners using R/3 defaults from the electronic documents contained in the R/3 system. For example, much of the information entered on the sales and delivery document is transferred to the invoice.

The conditions processing capability allows a company to decide how R/3 will calculate the values of company-specific data or process a document in the system. Conditions are used to determine prices, discounts, surcharges, requisition release strategies, and work flow output.

Let's say your company manufactures engines and has created a condition to price them. Suppose a customer would like to order engines from your company and that you must create the sales order. Because a condition has been created to price engines, the price of the engines will default into the sales order. This saves you from having to enter a price manually.

The reporting tools in R/3 are flexible and meet internal and external reporting requirements. Reporting tools are useful for analyzing your company's performance so you can develop future business plans. R/3 includes two types of reporting - Standard reporting and Information Systems reporting. Standard reporting allows users to view transaction level data in each R/3 application. Information Systems reporting allows users to view summary-level statistical data from R/3 applications and external applications. This means a single report can display information from different application modules.

One can import data or export R/3 reports to external systems. One can import or export reporting data to and from Microsoft Access, Microsoft Word, Microsoft Excel, and many other applications. One can run reports for the whole of your company or for sections of it. It is possible to create a report for a section of your company by specifying which organizational unit you want to report on. Organizational units identify the hierarchical structure of an organization.

Let's say your company has divisions in the USA, Canada, and the United Kingdom. Each division forms an organizational unit called a "company". A company is an SAP term for an independent legal entity. A company can be further defined into smaller organizational units, such as plants and purchasing organizations.

R/3 provides a number of standard reports. However, one can also define your own reports to display information in a way that suits your company's needs. The archiving capability allows you to transfer information from R/3 onto storage media. To do this, one can use the ArchiveLink application. ArchiveLink is a communications interface between the R/3 system and an optical archive system. This allows you to store R/3 documents on optical disks that can't be overwritten.

Chaos theory proposes that systems, no matter how complex, rely on an underlying order, and that even small changes in a system can cause complex behaviors or events to occur.

In many ways the butterfly effect could be used to describe the IT industry today.

The Ripple Effect: The IT infrastructure is based on a conglomeration of technologies and interactions among complex systems. Even small changes in one technology sector can have unpredictable and dramatic ripple effects on the rest.

What is IT?

IT encompasses the use of hardware, software, networking, telecommunications, and services, to create, store, exchange, and use information in a number of forms including voice, data, and video.

The IT industry can be broken down into the following segments:

• Semiconductors
• Hardware
• Software
• Networking and Communications Platforms
• Systems Integrations and IT solution providers

The semiconductor segment produces ships - a set of micro miniaturized electronic circuits fabricated on a single piece of semi conducting material - which are a central component of computers and other electronic devices otherwise known as integrated circuits or micro chips, they are often referred to as “silicon chips” since silicon is a commonly used semi conducting material In the IT industry, hardware generally refers to computers and peripherals. Computers are machines that process data according to a set of instructions (software) and peripherals are equipments that can be attached to computers.

Software tells hardware what activities to perform and how to process data. A set of software instructions is called a program. The two primary categories of software are systems software and application software.

Systems software is an overall “control” program, often transparent to the user, such as an Operating System (OS). Application software is any program that processes data for the user, such as word processor or a spreadsheet.

The networking and communications platforms segment includes developers of systems that allow control the sharing of data or applications among computers, peripherals, and communication devices Network operating systems are the software control of the network While not a technology in and of itself, the systems integrators & IT solutions providers segment is an important component of the IT industry infrastructure. A system integrator or IT solution provider is an organization that builds systems from a variety of diverse components - hardware, software, networking - providing a complete “solution”.

The products and services of this segment may vary widely. In general terms, an IT solution provider may bundle software with hardware that best optimize performance for a specific application and deliver it as a single product that requires no customization to use. This is called a “turn key” solution.

Web services are tools and protocols, which allow different applications to communicate, share data, or issue command with one another over the Internet. This can be accomplished with other internal applications, but one advantage of web services is that it relies on a single standard - basically XML (Extensible Markup Language).

XML enables the definition, transmission, validation, and interpretation of data between applications and between organizations.

At one time distributed computing meant individual workstations were able to run their own applications without reliance on a central server to supply them. Today, distributed computing implies grid computing where the computational power of many computers can be combined over a network to solve a single problem or to support a single application.

Distributed computing will support an infrastructure where processing power is not only shared, but sensitive to flux in demand for resources “The customer is always right”. But it's sometime difficult to determine just what the customer is right about.

Determining customer requirements can be tough, and for those in a technical field, it can be especially difficult to align technology with business needs. However, it is critical to have an accurate understanding of what your customers want before allocating precious development resources.

“Cautious” is the word of choice to describe the IT economic environment today, which is characterized by increased scrutiny of new IT investments and an emphasis on cost-cutting strategies. This has pushed customers toward IT/business alignment.

IT/business alignment is about ensuring that technology supports overall business processes rather than solving discrete problems in a vacuum. This requires communication between IT departments and business units, which for many organizations is still a relatively new concept.

A few characteristics of IT/business alignment include:

• Return of Investment (ROI) analysis of IT investments
• Consolidation of management tools
• A move toward adaptable IT infrastructure.

IT buyers are increasingly being asked to demonstrate the ROI of IT purchases, which means evaluating the cost of an IT solution against potential savings or improved operating efficiencies IT customers are looking for ways to cut costs without substantially reducing services. Part of this effort is a push toward limiting the number of suppliers, with hope of getting a better price. Examples of consolidation efforts include those items shown below:

Choosing single server and storage solutions: Since most corporations have data stored on any number of servers, or storage devices, many are looking at solutions that will provide a seamless interface for these repositories. Special purpose applications, such as storage area networks, are being considered.

Determining Integration Layers: While a single integration strategy for all management tools may not be feasible for many, customers are beginning to define groupings of functional areas where integration makes sense.

To match flexible business models, IT managers are also looking for cost - effective ways to adapt, as well as add services to, their infrastructures. Two examples include commodity IT strategies and a requirement for software as service models.

To increase the flexibility of IT infrastructure to match changing business requirements, customers are looking at off-the-shelf, standard - based products, which can be easily absorbed and quickly utilized without costly integration efforts. This approach is called Commodity IT Strategy.

Rather than full - out investments in new applications which may be used on a variable on short term basics, customers are looking for the ability to “rent” software of services based on usage. This is called Software as Service model.

Three specific characteristics of IT/business alignment are: The need for ROI analysis of IT investments, consolidation of management tools, and a move toward adaptable IT infrastructures The trend toward IT/business alignment has become the driver for a new approach to acquiring IT products and services. IT providers who are prepared to communicate how their solutions fit with each customer's individual business strategy will have an edge over the competition.

A cautious economic environment and the fact that big IT buyers are leaving toward consolidation of vendors have helped fuel merger and acquisition activity Merging with or acquiring another company is no easy task, and each enterprise will have a myriad of business rotaionales to justify such a major understanding The primary reasons one company might decide to merge or acquire another would be to:

• Thin out competition
• Expand services to customers in a new market niche
• Acquire core tools and synergetic technologies

In crowded market sectors where products differentiation is difficult to achieve, thinning out the competition by joining with a competitor could be considered a necessary survival tactic. One company might get lost in the shuffle, but a combined entity may have a better chance standing out.

Combining the best of two product lines can make a single company more attractive to customers and result in an overall larger market share. However, antitrust regulations - designed to ensure fair competition in the marketplace - must be considered in any merger or acquisition.

Activities that are seen to limit customer choices, provide vendors with undue influence on pricing, or create a monopoly in a market sector will be subject to scrutiny under antitrust laws.

Some IT vendors are looking at mergers or acquisitions not as a means of thinning out competition, but as a way to expand services to customers in an additional market niche.

Mergers or acquisitions can also be driven by a desire to own a synergistic technology that could speed up internal product development or get unique products to market more quickly.

Not all mergers and acquisitions are aimed at competitors. The ability to offer additional services without sacrificing an existing product line is an important driver.

Acquiring a new or synergistic technology can help get products to market ahead of competitors by limiting access to others or speeding internal product development processes Thinning out the competition is a driver for successful mergers and acquisitions because a combined entity may be better able to differentiate it's products in a crowded market A cautious ec